Personal Financial Waste Management

Rupee Saved- is a Rupee Earned. Modern management places lot of emphasis on waste management to improve cost effectiveness and profitability. There is a huge scope of applying similar philosophy in personal financial management as well. Overtime we get used to the routine expenses in our life and till such time we can afford them, there is not much concern. Carrying out a periodic review can improve our financial waste management. The resultant savings can be used to provider a better quality of life, or more wealth accumulation for future objectives.

Review Your Bills

A big chunk of routine expenses goes away in monthly bills. These include telephone, internet, cable, power, transportation, memberships etc. A careful review of each element might lead to significant recurring savings.

Cable. With proliferation of OTT and easy availability of 4G/Fibre based high speed internet, one can consider doing away with Cable connection. A single internet data source can provide for communication and entertainment purposes. This will also give us more control over our free times.  

Power. A careful review of the power consumption will lead to the wasteful usage and inefficient appliances. We tend to buy cheaper utilities, not realising that in the longer run it may work out costlier. Though difficult, those with a technical nag should calculate the wholistic cost of buying and utilising an electrical appliance. Further there are a plethora of affordable Wi-Fi based plugs and switches which can help automate routine things at home and conserve power. Some of us who have terraces with abundant sunlight should also consider installation of solar power systems which in many states are being subsidised by the respective state governments.

Mobile Bills. Calls on most telecom services are nowadays free, and we pay only for data. Almost all service providers have Family plans with flexible provisions. There is scope of some saving if we assess our data needs, have proper settings on all devices to minimize unwanted data utilization, and take a considered package.

Memberships and Subscriptions. We tend to buy annual packages for various services like clubs, gyms etc. At the outset it seems a very convenient proposition, but at times we realize that we are not utilizing the facilities optimally. In several cases, pay as we use approach might be more cost effective.

Similarly, there would be many other recurring bills with varying relevance. A periodic review will help us weed out, or minimize most of the financial waste.

Monthly Stock of Groceries and Utilities

There is always a cost involved in holding stock of anything. We also generally get swayed with bundled deals, or temptation to save more by buying more. A routine stock taking of unused items will indicate that there are many things which have gone bad without being utilized. There are also many things which we buy but never use. We can try to implement to the extent feasible the concept of Just in Time (JIT) which is very helpful in financial waste management. This means buying things only when required. A 10% reduction in wastage can significantly enhance our annual savings.

Consider Repair before Replacement

Easy availability of replacement, and free cash in pockets tempts us to buy new things as and when old ones develop problems. It may be prudent to first explore the possibility of repairing the items. I generally consider replacement only if either the item is not repairable, or the cost of repairs is significantly high.

Consider Hiring v/s Ownership

Today there are plethora of options, especially in big cities to hire almost every personal and household requirement. We all have different job contexts, and some of us frequently change locations. Some of us tend to replace existing items with newer models as and when available. At some places even Cars and SUVs of different make and models can be hired monthly. The cost of ownership is not only the initial purchase cost, but also the subsequent usage cost. For eg in the case of a vehicle it would be the fuel, maintenance and recurring insurance cost as well. A comparison of the per km lifecycle cost might favour renting a car over purchase.

Learn Minor Skills and Do it Yourself (DIY)

With time the basic services are becoming costlier. There are many things which we can fix at home without paid assistance. Investing in basic tools required for various electrical, plumbing and carpentry repairs can help us save significant costs over time. The activity can also be fun and education when done with children.

Avoid Impulsive Purchase

Time is a valuable resource and not everyone has enough of free time. However, most of us succumb to convenience and do not want to spend time/effort in conducting some survey while purchasing stuff. We must realize that convenience comes at a cost which can be saved by some diligence. Lifestyle driven impulsive buying leaves us with little opportunity to examine the need and correct source. Many a times we shelve a decision to buy something, or arrive at better options after giving some deliberate thought. There are also a lot of instances when we regret an impulsive spend.

Conclusion

Any reduction in wasteful expenses will lead to savings in a higher proportion. A disciplined investment plan will get a boost and help achieve the intended corpus for future financial objectives in a shorter period. Even if one has a healthy financial state and does not have to worry about future requirements, this exercise can help in upgrading the existing quality of life. We should try to evaluate all expenses for their necessity and quality. We also need to separate miserly conduct from financial waste management. The aim of the exercise is not to impose excessive caution on spending, but to save more resources for a better quality of life either today or tomorrow.