The biggest challenge which I personally have faced while doing my financial planning is cutting down on expenses. And mainly expenses which are related to shopping. Like a good school boy, I have made grand plans to keep expenses at tab and often wanted to cut down on spending on items that are way off my liking. I have made honest efforts to differentiate between needs and wants but often, somewhere the line got blurred. Let’s discus, in this article, how to spend less money on shopping.
While it is good to make plans, it is even better to follow and implement them. Over the course of last few years, I have demonstrated to myself that there are two main reasons for expenses to keep increasing and these have to do with shopping. Note that there are quite a few out there but these, in my mind, seem to be the most important.
Let’s discus about the two tips on how to spend less money on shopping.
Plan for small ticket purchases
This one can reduce your total personal net worth significantly.
Investors plan for their domestic trips while making their comprehensive financial plans. Domestic trips can cost as low as Rs 10,000 or as high as Rs 1 lakh.
Doesn’t it sound strange that we plan for a Rs 10,000 trip but don’t do the same for a phone or a laptop that we want to buy?
The need for small consumer durables at your home cannot always be very sudden. So your kid doesn’t always dip your phone in water or your laptop in the bathtub. In case of such emergencies where in you need to purchase items suddenly, money from the emergency fund can be used with the understanding that it will be replenished as quickly as possible.
But most of your demand for consumer durables can easily be planned. A laptop can easily cost Rs 50,000; a fridge or a phone Rs 15,000. It is wise to ponder whether your monthly salary can take a hit with these expenses without compromising on your savings and if not, should you plan for it via goal based investing.
It might look petty to plan for such small ticket items but if such purchases are happening at the cost of putting away money for your future, then you are in a tough spot. A few scant instances of these expenses in a year can make your expense lop sided as the expense amount is huge.
The point I am getting to is this – such small ticket purchases cause a hole in your pocket. So chalk out when such investments is going to hit you; assess whether you can still save and invest your targeted amount that month/year irrespective of buying this product; if you can, well and good, if not, you should have planned for it. So use that learning and plan for future small consumer durable expenses.
Do not go shopping for daily items without a list
How to spend less money on shopping – I consider this the most important factor in my case. My family often ends up shopping at the D-Marts and Reliance-Marts for basic groceries simply because they are very near to my home. These places are an invitation to disaster. You walk in to buy a kilo of rice and walk out with a cartful of crap you don’t always need.
Consider this – Reliance Mart, in its vegetables section, has a mouth watering display of cakes and confectioneries. Your wife, who anyways has a sweet taste (she married you remember!), cannot help reaching out for a few delicacies – some to eat right there and some to take away home. A few rupees gone!
You walk down the household section and there are innumerable things that can catch your attention – display pieces that are cheap and look good; discount offers on soaps and laundry items; soft toys and play things for the little one; range of pickles and food stuff that beats your imagination; not to forget the chewing gums at the time of check out. I did pick some of those a few times.
How to Spend Less Money on Shopping – the issue I am trying to point is simple
If you walk into these one stop shop stores without a list of items you want to buy, you are a dead duck. You end up buying things that you essentially don’t really need. You end up using the item because you bought it anyways but if you had skipped buying; the world would not have fallen on your head.
My shopping bills at these retails stores are always bloated more than 50% of what I would incur had I gone shopping at the local kirana store. That is scary to me. Do this twice in a month and you are sitting on an expense that is going to jeopardize your savings.
I would very strongly advise that along with your better half, you first prepare a list of things you need to buy.
Then go shopping at the local kirana store first. The kirana store curbs your ability to pick up things at random and they anyways store the most basic and necessary items. Going into these big retail chain stores should be your last option. And if you need to, just do it yourself!
So those are my top 2 important tips on how to spend less money on shopping or how shopping expenses can be curtailed. These are often missed and not given significance. Personally, I consider them as a challenge and while I am good at the first one, I hope to improve on the second.
I liked the way you took your own example and highlighted these points in first person!
I understand and appreciate the need to be cost-sensitive and conscience of the fact that over indulgence would dent our savings plan. However, I think we should explicitly have an entry of such unplanned and spot purchases in our monthly plans – simply because of the fact that after all we are working hard all the time and a little bit of off-the-hook indulgence/entertainment should be fine. The caution here should be to make sure that this should remain a one-off thing and not become a regular practice.
@Jaswinder Singh, Yeah very much agreed.
I think I want to cover this in a future article on this point you raised – how much over indulgence can one take in one’s life…worth considering…
Radhey,
Excellent post, very true. These big departmental stores lures us to buy unwanted products by their extensive display and packaging. I too used to buy goods in the past even though i never used them. But now i buy all my grocery from my local kirana stores. It saves a lot of money.
Rakesh
@Rakesh, How did you stop using them – did you simply stop going there in the first place ?
I do agree that it saves a lot of money if you buy from the kirana store.
Radhey,
The super market is not at walking distance form my home so i need to spend to & fro auto-fare. I just did a price comparison on products between supermarkets and kirana store and did not find much difference. It was not worth going to super markets but occasionally i do go there. Moreover only your local kirana store would give you 50gms of dry-fruits/garam masala.
Rakesh
@Rakesh, Yeah that is a significant difference – that at the kirana store you can buy stuff in small quantities.
Very good post. Few more tips.
1. Do not buy vegetable and fruits from Super markets? we can bargain and buy it from small shops or street guys.
2. Apart from the list of items to be bought, choose the shop to buy before you leave the home.
3. Do not fall for the discounts or deal of the day offers. you may end up buying items which you don’t need.
4. Check your bills once you purchase, instead of blindly giving the debit or credit card.
5. Plan before hand for festive season purchase.
@Ramachandran R., Hey thanks for contributing.
I think I really like points 2 and 4. Very very useful. I will include them in a comprehensive list which I will publish in the future.
Honestly, point 4 I seldom do but have myself found loopholes many a times when I checked. I think its a discipline thing, is it not ?
Thanks.
@Ramachandran R., With due respects Ramachandran, I think we should NOT bargain with street sellers like vegetable walas – unless they quote a unreasonable and unrealistically high price. While we must strive to cut down our unnecessary costs and expenses, we should have a humanitarian approach while dealing with people from poorer sections of our society. A few rupees would mean a lot to such people and we should be mindful of such facts in our endeavor to save costs. What I mean to say is that we should try to “optimize” how our money is being utilized rather than trying to maximize our savings.
By employing other very good points mentioned by you and other friends in comments for this article, I am pretty sure we should be able to cut corners where necessary and achieve our savings goal.
Pay in cash rather than using Credit or Debit Cards.
@Ramachandran R., Pay in cash – while this is fine, the biggest problem with this is that you lose of the ability of knowing how much you spent on what. I keep struggling each month with this and that is why I mostly use credit and debit cards because I then have traceability of what I spent on.
I can later pull our reports (using perfios.com). If I use cash, by the end of the month I have forgotten where I spent it on.
thoughts ?
@Radhey Sharma,
This will be a big problem if your entering the data by the end of every month. There is no way you can remember everything. I Keep the bills with me and I try to enter the data in the Excel within few days.
I feel that when you pay in cash, you know exactly where your money is disappearing. Sometimes you get a guilty feeling that your wasting your money. When you buy 100 items, then paying in cash is not going to make any sense.
I forgot to thank you for the Perfios.com information. It looks good. I am going to start using the free version soon.
This purely depends on your personal management, your control….. it’s very difficult at first place, slowly you need to practice your self with some ideas as pointed here like supermarket (Govt’s decision of 51% FDI in retail is on hold ;))……
If you have more than one bank account, keep your emergency fund in one, and the other use for your day to day (monthly) expense. First try to define your Grocery, Loan (EMI), Entertainment, Eating-out, Rent, Credit Card, Investment and fund accordingly (and +few) to your bank account, so in few months, you would realize yourself and try to save from your monthly fund. Actually your bank a/c will automatically make you feel guilty. Once big point is controlled, sub points will be forced automatically. All you need is strong self control, which is not easy. Remember you keep increasing your emergency fund, to have extra expenses done. Big point, explain your better half before you decide on anything.
@Chirag,
SELF CONTROL is the mantra you mean…hmmm…a difficult one honestly but not impossible. Good point Chirag, many thanks.
@Radhey Sharma, I know it was very strong comment ;).
Having a list and Spending only for a need is a very good habit but hard to practice for many.
Women are known to be shopaholics and Men are known to do everything what they want. This finally ends up in a big shopping bill at the end of the day when going together.
@Manickkam, How do you control it ?
@Radhey Sharma,
Have a list prepared before leaving for shopping and make sure you don’t have any major deviation from it while shopping.
Its always better to have the list prepared by the women who ends up getting up the other items in the nearby shop otherwise, which will cost you more otherwise!
Prepare a list and try to buy only once a month if possible as depending on your total purchase there may be a possibility of getting some discount or vouchers which may not be the case in case of small amount purchases frequently. Also if you buy lot of items ensure all the items are reflecting correctly in the bills as even a double entry of a small item will not command your attention in case you directly pay without checking the receipts.
Good one Radhey. Point no. 2 is very true & happens often with the majority.
Concerning the first point, your suggestion can work when the person is single or at the max just married with no kids. But once there are kids in the family I think it is difficult (or rather impossible) to plan well in advance for small ticket purchases all the way till they are grown up.
I wonder quite often how our parents planned/managed everything till now after fulfilling all our “sudden” demands.
And the second point, good suggestions by you & by other members who commented above. I hardly go to the big retail stores for the basic groceries. The grocery shop below my apartment has almost everything one would need for his daily/monthly use. Moreover I’m still single so I think I would have to follow all the above suggestions once my bachelorhood ends. 😉
@Sudip D, Agreed that there are some spends that just happen and you cannot plan for them.
Enjoy your life while you are single 🙂
Here are my two cents for reducing your monthly expenses
1) When it comes to fruits and veggies, try to maximize the intake of seasonal fruits and vegetables. Not only will they be cheaper but will provide higher health benefits. These days with improvements in logistics, people no longer know/realize what is seasonal. Classic example is peas (muttar). In the current season, you can get fresh peas at Rs 25 though frozen peas are also available at much higher rate.
2) Invest in a good washing powder. These days the quality of clothes/stitching is good for clothes to last for years. We just get bored of them or they fade.
@Pawan Nanda, OK, so this is exclusively for the home department at my house – I ain’t dipping my head into peas and washing powders. Let’s see what the better half has to say…