To get better results search whole phrases rather than keywords For example, if you are looking for risks involved in mutual funds investment then search "Risks in Mutual Funds" rather than "Risks" and "Mutual Funds" separately.

You can search for answers by service provider name. If you want to see answers by a particular service provider, search the name. You will see the questions to which the service provider answered.

Sam Ghosh Founder and SEBI Regd. Investment Adviser at Wisejay Private Limited Bangalore, Karnataka
How to escape living paycheque to paycheque?
1 answer/comment
01:12:35 PM, 4th June, 2019
  • Sam GhoshFounder and SEBI Regd. Investment Adviser at Wisejay Private LimitedBangalore, Karnataka

    Many young people face this problem. You get a job and earning money for the first time in your life. You think -

    “Okay, let me enjoy my life for some time and then I will think about saving”

    Fast-forward 2-3 years, you have set your lifestyle based on your earnings without caring about saving. Now, starting to save means compromising on lifestyle. So, you delay the saving. Now, you are the no-saving cycle which most urban youth face these days. This means you live lavishly at the beginning of the month and scramble at the month end.

    You think of saving but somehow cannot live with the idea of not buying new clothes every month or not eating-out every weekend.

    Note: I do not want to imply that there are no people who face real scarcity and struggle with money. This post is not about them but the people who are facing problems because they have fallen into the lifestyle trap.


    This is the first and most important step.

    I strongly recommend not to analyse your spending habits before this. The problem with analysing existing spending habits before you understanding your needs is classification bias. Your whole focus will revolve around simply rearranging the spending habits rather than creating the spending and saving habits that you really need.

    Make a list of clothes, shoes and accessories you need keeping in mind different occasions – formals for work, casuals for work, clothes different types of social events etc.

    Understand what kind of foods you really should eat. Try to understand what kind of diet is suitable for you from your past experience.

    Now, are there purchases that you were postponing – such as utensils, home appliances etc. ? This question may seem unrelated but it is not. How many times not having proper utensils become the excuse for ordering food online or eating out? How many times not having proper appliances become the excuse for paying someone to do the chores?

    Now, match what you have with your needs. If you are honest in judging your needs – you will be surprised to see the disturbing gap between your needs and what you spend money on. You will find that you do not have enough clothes needed for different occasions but closet filled with clothes you are never going to wear. Same with shoes and accessories.

    You will also realise that you pay a higher price for unhealthy food that ruins your health on a regular basis.

    Above all, you will realise that you postponed the purchase of the things you really need like utensils and appliances which would have helped you create better spending habits.


    Another difficult step. We love to acquire things but are fundamentally bad at getting rid of things. This is why it is important.

    Separate the things you did not wear for the last 6 months or used in the last 6 months. Now, some of the items are such that they cannot be used frequently. You can decide them separately. Make a plan to get rid of all other stuff in this bucket- sell them if you can, donate them or simply throw them. Getting rid of them is important. Without getting rid of them you cannot make room for things you really need.


    Get the utensils and appliances you avoided to buy. The mental block people face while buying such things is that they cost more. Yes, they do but they are not expenses like eating at a restaurant, they are investments. The benefits of such purchases are long-term. Do not compare them with short term expenses.

    It may not be possible to get all the things you really need at once. Make a list of them and look out for opportunities to acquire them at a discount etc. When you know what you need, you will be in a much better position to take advantage of the offers.


    Now, that you know what you need and have a plan to acquire, you need to avoid buying things that you do not need.

    Like all impulses, impulsive buying also can be tied to some triggers. It is often seen that you spend more money at shops and buy more useless stuff when you are hungry. These triggers differ from one person to another. That is why you need to understand them yourself.

    What causes your impulsive purchases – Loneliness? Anger?

    Understanding the triggers may not be enough to eliminate impulsive purchases but will help you moderate such behaviour.


    At this point, you have a much better understanding of your needs and habits. It is not time to set goals.

    Do not rush to invest. It is quite likely that you do not have an emergency fund. Creating a large enough emergency fund (at least to cover 6 months of expenses) is the first goal you should set. The reason for first creating the emergency fund is to avoid relapse to old spending (and no-saving) habits when faced with a lack of liquidity and market volatility.

    After you are done with the emergency fund, plan an investment portfolio suitable for you with the help of an advisor. Then slowly start building that portfolio. It is better to start with low volatility investments and slowly move to high volatility investments. It takes some time to get used to market volatility.

    Be the first to react