Arti Tibrewala Darooka
A chartered accountant and MBA, Aarti is an entrepreneur and financial literacy advocate. She has over 15 years of combined experience in the consulting, advisory and travel industries. A national ranker in CA, Aarti is a published author, who has written a plethora of books for children’s financial education and is currently helping build awareness for financial literacy for women through her platform, Sthreedhan.
Rishika has been working as a research analyst with a big firm. She pays rent for her accommodation, living expenses, her entertainment expenses like eating out, movies, etc., and of course, shopping!
While Rishika is able to comfortably manage her expenses, her parents have been reminding her repeatedly to start saving money and investing. However, after all the persistence from her parents, Rishika has realised that she’s not left with much money at the end of each month after her expenses. She sits down with a few of her friends to understand what they’re doing with their money and how they’re managing their finances.
Rishika’s team leader shares that he has a system of investment where he makes monthly payments for his investments, instead of a bulk amount at one time in the year. This has helped him ensure that he puts away some money every month. One popular mode of doing this is SIP (systematic investment plan), where the same amount of money gets invested every month.
Her colleague, Radha, added that she has set up a direct debit for her SIP on the fifth of every month. A direct debit means that she doesn’t have to take the stress of remembering to make the payment for her SIP. The money goes directly and ensures that her monthly investment goal is taken care of.
Rishika’s college best friend also shared that she has reduced her credit card limit to ensure that she does not end up overspending on her credit card for expenses that are discretionary, i.e. optional. This way, she resists the urge to spend too much through the month as she needs to maintain some balance on her credit card. She also does not use her UPI ID for any transaction over a small limit of Rs.300, ensuring that only essential expenses like conveyance, fruits, vegetables and groceries go out on UPI.
Another measure that Rishika’s cousin has implemented to help him reduce his spending is to uninstall the commonly used shopping apps and also food delivery apps. While this does cause inconvenience, it has ensured that he practices better buying habits and reduces instinctive buying. He also told her that it meant that instead of ordering food home, at least he would cook sometimes and put in the effort to physically meet a few friends for dinner whenever possible!
Rishika’s father also suggested that she set up a standing instruction in her savings account to put any remaining balance in her account at the end of the month into a fixed deposit on the same day that her next month’s salary is credited. This way there is minimal idle cash lying in her account.
Rishika realised that there were many small mistakes that she was making when it came to her finances. Restructuring them was not going to be hard and that if she implemented these small suggestions, she would end up not only saving a lot of money, but also ensuring that her money started working for her. She understood after applying these suggestions for a year, what the power of habit was!
After all, as financial literacy expert and famous entrepreneur John Hope Bryant says, “You can make money two ways – make more, or spend less.”