Each Penny COUNTS

Even the smartest of people normally have spending holes which drain their money without them even noticing it. Sanjeev Sinha tells you how to plug those leaks & watch your savings grow

DO YOU really need that swanky mobile phone or the latest LCD TV which has just been unveiled in the market or have they caught your attention just because your neighbour got them the other day? It is possible that some of you might be able to turn a blind eye to such things. But have you also ensured that you are paying all your bills on time or are not carrying a creditcard balance? 
    The fact is even the smartest of people normally have budget leaks — whether it's careless spending or tiny indulgences that add up over time. And while they keep bothering where their money actually goes, these spending holes drain their hard-earned money without them even noticing it. Here we take a look at some common ways people overspend and waste money and how to plug their spending holes: 
BEING IGNORANT OF ONE'S SPENDING 
Ignorance is bliss? Think again! "Many chronic spendaholics live in denial about how much they spend. If you realise how much you spend on various items, this alone may be sufficient to reduce your spending," says Atul Surana, certified financial planner and MD of Mangalore-based Cata- lyst Financial Planning. For example, on a night out it is easy to spend much more than you think, especially if you pay for drinks and food on credit cards. Often the problem is relatively cheap items that we buy often: coffee, takeaways, gift for friends etc. Solution? Go through your bank accounts, credit card statements and you will surely find all the reasons for more disciplined spending. 
BUYING ON IMPULSE 
Do you often purchase something and then get it home to find you aren't excited about it any longer? It happens with most of us. Therefore, if you are in the habit of spending on impulse, make an effort to have a moment of reflection before buying anything. "If you see something you would like to buy, try waiting a day or two before actually committing yourself to buying. If you really want it, you will come back. This also gives you the chance to find other things that may be better," says Surana. 
CARRYING CREDIT CARD BALANCE 
Debt has today become a way of our life with the phenomenon of consumer finance schemes and credit cards becoming a big driver of this devil. True, "using credit cards in 
    emergencies is understandable. The problem, however, starts when people start using their plastic money even for recurring expenses like getting the gas filled in the car, buying groceries and clothes, among others," says Lovaii Navlakhi, MD and chief financial planner, International Money Matters. Paying interest as a result of failure to pay off credit card bills makes the price of the charged items a great deal more expensive, sometimes taking decades to clear the dues. 
AVOID PAYING BILLS ON TIME 
If you are one of those who avoids paying bills — such as mortgage, phone, credit card and utility bills — on time, you are wasting lots of money without realising it. For instance, if you have four credit cards and you are not clearing the minimum dues on time, you would be paying at least Rs 2,400 in late charges alone. However, if the same amount is invested every month in a scheme that earns, say, 10% annually, it can actually fetch you Rs 32 lakh in 25 years. And we have not yet factored in the savings resulting from the timely payment of other bills! 
SPENDING BY HABIT 
"Quite often a lot of our spending is a daily habit, which could be unnecessary too," says Surana. For example, if you buy a takeaway coffee everyday for your office staff/visitors, why not invest in a coffee machine? And just because you spend Rs 200 a day on lunch, doesn't mean this habit has to continue forever. Try taking your own lunch. Re-evaluate all your habitual spending patterns and decide whether that is necessary. 
HAVING UNUSED MEMBERSHIPS 
You might be a member of that elite club, but do you also have enough time and resources to go there and enjoy your life as some spendthrifts do? Or are you getting your money's worth out of that costly gym membership? If not, then why to join such clubs or become a gym member at all? 
PAYING FOR UNNECESSARY SERVICES/CHARGES 
You may sometimes need a car helpline service, but why to go for the extended warranty on car or washing machine when that is hardly worth the price? Do you also really need all those extra features for your cell phone or six bank accounts and a dozen credit cards when a few may be sufficient? 
NOT HAVING CLEAR NEEDS IN MIND 
People tend to overspend when they don't have a clear objective of what they need to buy. Thus, they often end up buying things just because they 'look nice' and not because they are actually needed. Therefore, avoid going into the city centre without a clear objective. 
LIVING BEYOND ONE'S MEANS 
With the lure of easily-available loans to buy that first car or easily-available credit cards, anyone would be tempted to indulge even without being able to afford the expense. "But just because you own a credit card, it does not mean you should indulge in whatever you fancy at the moment. The suggestion is not that one should never splurge on anything ever — just that you should implement a higher level of self control," says Navlakhi. 
    SURESHOT WAYS OF BLOWING MONEY 
Buying things you DON'T NEED BUYING BRAND name instead of generic) Not going for the BEST DEAL 
Not availing of discounts/ CASH BACK OFFERS NOT BUDGETING your expenses Not giving yourself strict income LIMITS