Why we struggle to save for retirement?
An average family spends more than INR 50K per month on non-essentials. That’s roughly INR 600K a year on things we can do without. This kind of lifestyle forces us on living paycheck to paycheck. In that case who would think about how to stop wasting money?
Cutting back on spending is just one part of the solution to saving for early retirement. However, it’s a very effective start. Here are 7 pointless things you should stop wasting your hard-earned cash on:
1. Eating out
According to a survey, 69% said they wasted money dining out. It’s nice to get out of the house and have someone else cook for you. But the experience isn’t cheap. On average, a family spends a combined INR 25K per month on eating out (yes, delivery and drinks count):
- Restaurant meals: 10K
- Drinks: 5K
- Takeout or delivery: 12K
- Buying lunch: 10K
That adds up to INR 90K per year, so you can imagine how much money you can save preparing your own food. So the question is how do I stop wasting money on food? Of course, you should sometime treat yourselves to a night out from time to time.
But only to help control costs. You can also limit ordering beverages or drinks. Water with lemon is just as satisfying — and it’s free. This reduces the bill anywhere from INR 500 to 1000.
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Additionally cut down appetizers or desserts, which can easily save you another INR 5K or more. (I always keep a pint of ice cream in the freezer in case of emergency.)
Lastly, leftovers never go wasted. Even if it’s just a few pieces of vegetables, always find a way to reuse them the next day.
2. Phone upgrades
It’s hard to ignore the hype every time there’s a new smartphone from Apple, Google or Samsung. But today’s devices are so advanced that they can function for years without a problem. And while the updated features are nice, they aren’t life-changing.
In most cases, it only makes sense to get an upgrade if your current phone has major technical issues or stops working completely. But even then, taking it to a repair shop first can save you hundreds of rupees. Depending on your carrier, buying the newest model can cost you an extra INR 5K per month (for financing or leasing).
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For each year when you decide not to upgrade your smartphone, you save up to INR 20K to 30K. Rather than owning a piece of technology that depreciates each year, it’s better off putting that money into appreciating assets in the stock market.
By now you might be like – I will have to stop wasting money on gadgets after food.
3. Clothing and apparel
The average Individual spends about INR 100K per year on clothing and apparel. The figure seems hypothetical but it’s close to reality. Upper middle class and rich ones even spend more than 100K behind luxury clothes every year.
Fast fashion doesn’t make shopping any less tempting, but keep in mind that it only takes a few months for whatever clothes, shoes or accessories that are in style today to be replaced by some other contemporary trend. So before you make a purchase, ask yourself if you really need or have the room for it.
My clothes-buying rule is simple: Vow to buy less. I just buy the essentials, and once I do, I’ll wear them until they’re stained, ripped or no longer fit. On average, I only spend between INR 5K to 10K for clothing and apparel in a year.
4. Extended warranties
Extended warranties have become a big business: Roughly $40 billion, according to Warranty Week. A study found that consumers often overpay for extended warranties. Because they overestimate the likelihood that a product will need a repair.
But these service plans function like insurance. For every dollar you spend, you’ll likely only get pennies back. Hence, never fork over extra money on major appliances. I could save your thousands.
Before making a big purchase, always do research. Make sure you get a high-quality item. Quality guarantees that it’s less likely to break. Additionally, put a portion of the money into a designated repair or replacement fund. This is the money you otherwise would have spent on warranty fees. Just to stay on the safe side. That’s it.
If you really think you need an extended warranty, always read the fine print. In some cases, coverage isn’t eligible for accidental damages. Your claim can be denied if you didn’t follow routine maintenance instructions. Also, you might already have extended coverage benefits through your credit card, so check with your card issuer first.
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5. Cable TV
Cable TV prices have skyrocketed over the years. But times have changed. With the number of streaming services available, ditching cable television can be an easy change for you.
Instead of paying more than INR 1500 per month for cable TV, pay for YouTube TV. It includes local television networks. In addition, you get a variety that you might not find on a cable or satellite service.
There are plenty of other TV streaming options. Netflix mobile streaming is much cheaper than premium services like Tata Sky, which costs more than 600 per month.
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A word of caution: We end up wasting hundreds of rupees per year on subscriptions we barely use. So be mindful when deciding what to sign up for (and try to stick with just one service, if possible).
After testing out a few services, I have Amazon Prime and Netflix mobile streaming subscription. It’s way cheaper than my TataSky dish tv. This could be the next big thing you must stop wasting money on.
6. Impulsive Shopping
This is a broad category, but it basically includes anything you don’t need, but are tempted to purchase “at the moment” — like that pack of a chocolate bar in front of you at D-Mart.
Trust me, immediate satisfaction will wear off before you know it. There were so many times when I had to stop myself picking up bathing soaps. Why? Because it “seemed like a good deal” at the D-Mart. Even though I had a full stock of toiletries at home.
Big purchases are the most dangerous. That beautiful Zardoshi saree, for example, might sound like a smart investment right now. And you will convince yourself that you’ll wear it every day.
But if you’re going to pay INR 15K for a saree to wear it on a single function then better give it some serious thought. It’ll probably just end up collecting dust in your wardrobe.
If you are new to Surat101.com then you must start from here. Tell me how did you stop wasting money or control your spending habits.