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How to Spend less than you earn - 11 Mistakes to Avoid

Last updated :
March 10, 2024
/

minutes read

It’s a common mistake that many of us make: spending more money than we make.

Whether it’s a small, everyday indulgence or a major purchase, it’s easy to overspend and find yourself in a financial hole. So why do we do it?

The answer is simple: it’s human nature. We’re wired to seek instant gratification and often make decisions without considering the consequences. We may think that if we just buy this one thing, our life will be better. But it’s important to remember that these instant gratification purchases come with a price.

Common Mistakes That Make You Spend More Than You Earn

Mistake 1 - Keeping up with the Kapoors

It’s easy to get caught up in consumer culture and think that we need the latest and greatest of everything. We may think that if we buy a certain item, we’ll feel better about ourselves and fit in with our peers. But the reality is that buying things to impress other people will only leave you with an empty wallet.

Mistake 2 - Keeping Up With Trends

Keeping up with the latest trends can be expensive. Instead of always buying the newest items, look for cheaper ways to stay fashionable, such as shopping at thrift stores or borrowing items from friends.

Mistake 3 - Not Having a Budget

Budgeting isn’t always fun, but it’s essential for financial success. Without a budget, it’s easy to overspend without realizing it. Keeping track of our income and expenses can help us stay within our means and avoid overspending.Many people fail to create a budget and track their spending. Without knowing where your money is going, it’s impossible to know if you’re staying within your means and avoiding overspending.

Mistake 4 - Not Knowing Your Necessary Expenses

If you don’t know your fixed expenses, it’s easy to spend more than you can afford. Make sure you know your fixed costs, such as rent, utilities, and debt payments, before you buy luxury items.

Mistake 5 - Not setting financial goals

It’s important to have goals that we’re working towards. Setting financial goals can help us stay motivated and keep our spending in check. Whether it’s saving for a vacation, paying off student loan debt, or investing for retirement, having a goal can help us stay focused on our financial priorities.

Mistake 6 - Not Planning for Unexpected Expenses

Emergencies happen, so it’s important to be prepared for them. Make sure you have an emergency fund saved to cover unexpected costs, such as medical bills or car repairs.

Mistake 7 - Falling for impulse buys

We’ve all been there: you’re at the store and see something you just have to have. Impulse buys can be tempting, but it’s important to remember that they’re often unnecessary purchases. Before you make the purchase, take a few minutes to think about whether or not you really need it.

Mistake 8 - Not planning for the future

It can be easy to focus on the present and not think about the future. But if we don’t plan ahead, we could be setting ourselves up for financial disaster. We should be thinking about the long-term consequences of our spending and saving habits and making sure we’re preparing for the future.

Mistake 9 - Not Shopping Around

Shopping around for the best deals can help you save money. Instead of just buying from the first place you see, compare prices to get the best value for your money.

Mistake 10 - Paying With Credit Cards

Credit cards often come with high interest rates and can quickly turn into debt if you’re not careful. Try to pay for items with cash or debit whenever possible.

Mistake 11 - Not Saving

Saving money is one of the best ways to avoid overspending. Set aside some money each month to contribute to your savings and build up a cushion for the future.

What makes us spend more than we earn in India

  • Culture and society have a big impact on the way Indians spend their money. People often buy things like jewelry or cars on credit or loan, which can cause them to spend more than they should. This is because people don't budget or plan well and want to keep up with the latest trends or keep living a certain way.
  • Paying for Luxury Items: Many people in India fall into the trap of buying luxury items that they cannot afford. This can be anything from expensive cars, designer clothing, jewellery, and vacations. These types of purchases often lead to excessive debt, as people fail to budget properly and do not understand the long-term costs associated with such purchases.
  • In today's age of social media marketing, influencers, and advertisements, we may be influenced to make impulsive purchases due to peer pressure.
  • Another factor leading to overspending is the lack of financial literacy. A lack of understanding of financial concepts such as budgeting, savings and investments can lead to people spending more than they can afford.
  • Not Utilising Credit Card Benefits: Credit cards are a great way to build credit, but many people in India misuse them by overspending. Credit cards often come with cashback and reward programs, so it is important to understand how to use them properly in order to take advantage of these benefits.
  • Taking Out Loans: Taking out a loan can be a great way to get access to money quickly, however, it is also important to understand the risks associated with taking out a loan. Many people in India fail to understand the potential consequences of taking out a loan, leading to overspending and excessive debt.

The bottom line is that overspending isn’t a good idea. It can lead to debt, financial stress, and other problems. But with a little planning and discipline, we can avoid overspending and work towards our financial goals.

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Dive into India's colorful wardrobe with our easy-to-use map! Just click on a state and see what people wear, from timeless classics to trendy outfits. Plus, check out the cool brands they love. It's fun, fast, and full of surprises!
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Shuaib Azam
Shuaib is a Marketing & Growth lead at Hubble. When he isn't working on growth initiatives, Shuaib writes fiction and doodles space monkeys.

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