The scariest thing in life would be this: living paycheque to paycheque. But unfortunately, this is a reality of many millennials now a days. Actually, this situation is not just with millennials but can be seen with middle-aged group people also.
The most important reason for the same is lifestyle creeping. Most of us get carried away with branded clothes, cars, accessories, houses, pieces of jewelry, and weekend parties and outings. This leads to spending more than earning.
Just for sake of matching the peer pressure or showing off status, we not only end up spending what we have today but also our future earnings by way of credit cards.
When we do not work on the basic concepts of personal finance named NEED and WANT, we end up spending more and more on instant gratification and lifestyle pressure.
- That is why it is very important to pen down your expenses and review it carefully each month. This will help you to know how much you are spending on essential things and how much you are spending on wishes and aspirations.
- Make sure you are transferring at least 30% of your take-home to another bank account called Investment account on the day your salary gets credited. This leads to forceful saving and you have to adjust on the remaining 70%.
- Start using debit cards or UPI payment systems instead of a credit card. This helps to curb our desire to spend our future earnings in present. It also helps us to refrain from getting trapped in the revolving credit if we could not pay credit card dues on time.
- Make a monthly budget by allocating 50% on NEEDS and 20% on WANTS and stick to it for learning a better spending pattern.
- Automated forced saving from your gross salary by opting EPF/VPF and corporate NPS allocation. It leads to saving some part of your salary before you get it in hand which ultimately leads to lesser spending.
- Get a habit of saving and investing for your financial goals. Set your saving rate target and keep on increasing it slowly and steadily.
Wholistic change in your attitude is what is needed when we really want to come of living paycheque to paycheque system. Changes in my way of life lead financial peace
This may help you to live a peaceful financial life henceforth.