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Feature: Saving vs Spending

How to minimise your spending and maximise your savings?

Do you often look at your bank balance and wonder how your hard earned money just vanishes like some evil trick played by an invisible entity? Do you always think about scrimping and saving yet end up barely surviving until the next paycheck?

More people than ever are in danger of developing an over-spending, or under-saving, routine. If this practice remains unchecked, a lot of people will find themselves ramping up unnecessary debts or having trouble meeting financial commitments due to your poor money management skill.

Nevertheless, this article isn’t meant to bore you with the common mantras of ‘101 ways to reduce your spending’, ‘101 ways to set a monthly budget’ or ‘101 ways to meet your commitments”. I believe that most people can’t handle 101 ways, its impractical and overbearing, and majority of your bad financial habits could be solved in less than 101 ways, maybe say…closer to 2 ways.

1. Delayed Gratification

How many times have you went back home from a shopping trip and wondered why you bought some of the things that you did even though you don’t really need them? Don’t answer.

What keeps most people from being able to grow their savings is the habit of wanting instant gratification. This happens partly because of the incessant exposure to compelling advertisements that entice you to desire a sleek car, a new luxury bags or a limited edition designer watch. However, if you are able to practise delayed gratification, you will quickly realise that you will able to save much more and build up your saving nest much faster. There are 2 simple tactics you can follow quickly to accomplish this.

Tactic #1 –Whenever you are tempted to buy things on supposedly massive discounts from their originally listed prices at retail shops, try shopping around the entire shopping mall first or come back another day. Very often, you will find that you do not actually need the item no matter how much the posters and banners claim otherwise. Taking some time off will make you clearer and not succumb to an instinctive purchase that you can actually live without.

Tactic #2 – Let us looks at a potentially expensive purchase such as designer handbags or a pair elegant men’s shoes (yes men also fall into this trap, but I must say, less of us do, and its less often…I hope). One very important thing here is to assess if the item is really worth the price no matter the discount and if it is within your budget. I have many friends who slog their guts out every day, exchanging hundreds of hours of man-hours just for a Louie Vuitton (LV) bag.

E.g. A Monogram series LV Bag costs $1,200 being considered by a fresh graduate.

Monthly income


Daily income (2,500/22 working days)


Hourly income (113.64/8 hrs per day)


No. of working hours for an average working professional to buy an LV bag
= $1,200/$14.20
= 84.5 hours
= 10.56 working days!

Now ask yourself once more if you really think it is worth exchanging those 10.56 working days, that’s about half a month’s pay, for that LV bag again. For many of us, looking at our big ticket purchases in this way will cause us to re-think our decision to spend money impulsively.

In my opinion, it is very disheartening to see hard-earned money disappearing just like that. I believe there are many cheaper substitutes out there of the same excellent quality. People are just accustomed to paying for premium branding products which is a no-no when it comes to clever money management.

2. Pay yourself first

Very often, we find ourselves wondering why is it that by the end of the month, it seems like all our money has evaporated into thin air. If you have just stepped out into the working world, saving may seem impossible. You have monthly instalments, groceries, student loans, credit card bills and even financial goals you wish to achieve once you found a job. Sure, you’d like to save, but there’s just no money left at the end of the month. And that’s the problem: most people save what’s left over —after bills and discretionary spending. And more often than not, that amounts to zilch.

One of the most effective ways to solve this problem is to “Pay Yourself First”. To pay yourself first, it  means: Before you pay your bills, groceries, or do anything else, you set aside a portion of your income to save. The first bill you pay each month should be to yourself – and stock up your savings while young as it can be used for important causes such as when you are preparing to start a family in the future. This habit, developed early, can help a person build tremendous wealth.

This concept is simple yet very useful. When you pay yourself first, you’re mentally establishing savings as your top priority. Yes; that few hundred dollars or 20% of your monthly income going straight away even before you can spend it is going to be painful initially, but, the best way to develop this habit is to make the process as painless as possible; making it automatic, making it invisible. If you arrange to have the money taken from your paycheck before you receive it, you’ll subconsciously forget its existence while building your saving nest quietly.

Let’s cite an example.

Save After Paying for Everything

You take home $2,500 and somehow or other, you usually spend around $2,000 on “necessities” such as car and housing instalments, food and bills etc.; leaving $500 per month to save at the end of the month. However, you forget that there are still some discretionary expenses where you MUST fork out your money.

Your best friend’s birthday is coming up. You go out there looking for a gift and knowing that you have $500, you spend $100 on the gift. There comes another gathering of your friends at the KTV lounge and $100 is gone again. In the end, you are only left with $300 to save.

Pay Yourself First

Let’s assume the same scenario but a different approach. You aim to save $500 per month. You set aside the $500 by an automatic transfer to a savings account or a fund. You now only have $2,000 as your take-home pay instead of the usual $2,500.

So, you are going to rebut and say, then what about the important birthday and gathering? In the context of this rule, we advocate you to spend within your means – $2,000. You can still do everything you want, but now with a smaller budget – just imagine your job only pays you $2k and life will be easier.

Ultimately, you will get used to the process painlessly and learn how to cut costs to spend within the take-home pay budget which already excludes the money being set aside for savings.

Further Reading

If you are very interested in this topic, I would recommend to you a book – David Bach’s 2003 best-seller, “The Automatic Millionaire”. This book is devoted exclusively to the subject and consists of a step-by-step guide to developing the saving habit and making it automatic.

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