How to control your spending and maximize your wealth
- Manan Mehta
- Nov 20
- 13 min read
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Money slips through your fingers despite earning well. You start each month optimistic, end it stressed, and wonder where your entire salary disappeared. If this sounds familiar, you're not alone—but you're about to change that forever.
This comprehensive guide reveals exactly how to control spending, the critical rules for taking EMIs that protect rather than destroy your finances, and proven savings strategies that work for Indian earners.
The Fundamental Truth: Earn More, Spend Less (Or You're Digging a Hole)
Before diving into tactics and techniques, let's establish the bedrock principle that determines financial success or failure:
If you're not earning more than you spend, no investment plan, no savings strategy, no financial advice will save you. You're digging a financial hole faster than it can be filled.
This might sound harsh, but it's liberating. Every financial problem and every financial solution ultimately comes back to this simple equation:
Income - Expenses = Savings/Investments
If this number is negative or zero, you're financially drowning. If it's positive, you're building wealth. Everything else is just optimizing how positive you can make this number.
Understanding Your Payment Methods: Cash, Debit Cards, and Credit Cards
Before controlling spending, you must understand the tools you're using to spend money—because the method matters more than you think.
The Hierarchy of Payment Methods
Cash > Credit Card > Debit Card (for shopping)
This ranking might surprise you, especially seeing credit cards ranked above debit cards. Here's why this order makes sense:
Cash: The King of Spending Control
Advantages:
Physical limitation: When your wallet is empty, you stop spending automatically
Psychological impact: Handing over physical notes feels more "real" than swiping
Zero fraud risk: Nobody can hack or steal your physical cash during transactions
Instant awareness: You see your money decreasing in real-time
Disadvantages:
Inconvenient for large purchases
No purchase protection
Easy to lose
Difficult to track unless manually recorded
Best Use: Daily small expenses (groceries, local transport, small purchases)
Credit Cards: Use with Extreme Caution
Credit cards are financial dynamite—they can either work for you or blow up your finances spectacularly.
How Credit Cards Work:
Your card links to a virtual account with a spending limit (say ₹2 lakh). This works like a postpaid mobile connection. Whatever you purchase gets added up, and you receive a bill at month-end. You then have 20-50 days (grace period) to pay.
The Golden Rule: Always Pay FULL Amount or MORE Before Due Date
If you follow this rule religiously:
✓ You use the bank's money for 20-50 days at ZERO interest
✓ You earn reward points/cashback on purchases
✓ You build excellent credit score
✓ You get purchase protection and insurance benefits
The Catastrophic Mistake: Paying Only "Minimum Amount Due"
If you pay even ₹1 less than the full bill amount:
✗ Interest charges apply at 36-48% annual rate (3-4% per month!)
✗ Interest calculated from purchase date, not bill date
✗ You enter a debt spiral that's extremely difficult to escape
Example of Credit Card Trap:
Bill amount: ₹50,000
Minimum due: ₹2,500 (5%)
You pay only minimum
What happens:
Interest on ₹47,500 at 3.5% per month = ₹1,662
Next month bill: ₹47,500 + ₹1,662 + new purchases
This compounds every month
Within 6 months, you owe ₹65,000+ on original ₹50,000 spending!
Recommendation: Don't own a credit card until you're financially disciplined enough to ALWAYS pay full amount. Better to use cash than fall into credit card debt.
Debit Cards: Convenient But Dangerous
Debit cards link directly to your bank account. Whatever balance exists in your account is your spending limit.
Why Ranked Below Credit Cards for Shopping:
Security risk: Connected to real bank account; fraud directly drains your actual money
Immediate impact: Money leaves account instantly; harder to dispute fraudulent charges
No float period: You pay immediately, unlike credit card's 20-50 day grace period
Limited fraud protection: Banks offer less protection compared to credit cards
Best Use:
ATM withdrawals (NEVER use credit cards at ATMs—cash withdrawal attracts immediate interest!)
Small to medium purchases where you want immediate debit
Situations where credit cards aren't accepted
Golden Rule: Only use debit cards when you're making a planned, budgeted purchase. Never for impulse buying.
If you want someone to assist you with your investments or spending and grow your wealth, feel free to contact us. Our team of experts will be happy to help. You can also email us at help@reymanwealth.com
The 50/30/20 Rule: Your Budgeting Foundation
The 50/30/20 rule is the single most effective budgeting framework for most Indian earners. It's simple, flexible, and actually works.
Understanding the 50/30/20 Breakdown
After receiving your salary (post-tax), divide it into three buckets:
50% → Needs (Non-Negotiable Expenses)30% → Wants (Lifestyle and Discretionary Spending)20% → Savings and Investments (Your Financial Future)
The 50% Needs Bucket: Essential Living Expenses
"Needs" are expenses you absolutely cannot avoid—things required for basic living and meeting financial obligations.
What Qualifies as Needs:
Rent or home loan EMI
Electricity, water, gas bills
Groceries and essential household items
Transportation (commute to work)
Health insurance premiums
Life insurance premiums
Minimum debt payments (EMIs you're already paying)
Children's school fees (basic education)
Basic clothing
Mobile and internet (basic plans)
What Does NOT Qualify:
Premium housing in expensive neighborhoods
Brand-name groceries when generic works
Personal vehicle when public transport suffices
Luxury insurance riders
Private school when good government school exists nearby
If Your Needs Exceed 50%:
This is a red flag requiring immediate action:
Downsize housing: If rent/EMI alone consumes 40-50% of income, you're living beyond your means
Eliminate lifestyle inflation in "needs": That ₹2,000/month premium grocery subscription is a want, not need
Negotiate or refinance: Can you get lower interest rates on existing loans?
Increase income: If needs genuinely can't be reduced, your income is insufficient for your life stage
Example Calculation:
Monthly income (post-tax): ₹80,00050% for needs: ₹40,000
Budget breakdown:
Rent: ₹20,000
Groceries: ₹8,000
Utilities: ₹3,000
Transportation: ₹3,000
Insurance premiums: ₹3,000
Mobile/internet: ₹1,500
Minimum loan EMI: ₹1,500Total: ₹40,000 ✓
The 30% Wants Bucket: Live Your Life (Within Limits)
"Wants" are things that improve your quality of life but aren't essential for survival. This is where you're allowed to enjoy your earnings.
What Qualifies as Wants:
Dining out at restaurants
Entertainment (movies, streaming subscriptions, concerts)
Hobbies and recreational activities
Gym memberships and fitness classes
Travel and vacations
Shopping for non-essential items (latest phone, branded clothes, gadgets)
Premium versions of things (business class travel, expensive coffee)
Gifts for others
Personal grooming beyond basics
The Critical Distinction:
You NEED food → groceries are a "need"You WANT restaurant food → dining out is a "want"
You NEED communication → basic mobile plan is a "need"You WANT latest iPhone → upgraded phone is a "want"
Why 30% Matters:
This allocation acknowledges that you're human. Depriving yourself completely leads to burnout and eventually blowing your entire budget. By dedicating 30% to wants, you can enjoy life guilt-free while still securing your future.
If Your Wants Exceed 30%:
You're lifestyle inflating. Every rupee above 30% spent on wants directly reduces your future financial security. Common culprits:
Daily ₹200 coffee shop visits (₹6,000/month)
Weekly restaurant meals (₹8,000-12,000/month)
Unused gym membership (₹3,000/month)
Multiple streaming services (₹2,000+/month)
Impulse online shopping
Example Calculation:
Monthly income (post-tax): ₹80,00030% for wants: ₹24,000
Budget breakdown:
Dining out: ₹6,000
Entertainment subscriptions: ₹1,000
Weekend activities: ₹4,000
Gym membership: ₹2,500
Personal shopping: ₹6,000
Gifts and miscellaneous: ₹4,500Total: ₹24,000 ✓
The 20% Savings Bucket: Your Financial Future
This is THE most important category—the only one that actually builds wealth.
What Goes in the 20%:
Emergency fund (3-6 months expenses in liquid fund)
Retirement savings (EPF, PPF, NPS)
Investment in mutual funds (SIP)
Investment in stocks
Debt repayment beyond minimums
Children's education fund
Down payment savings for home/vehicle
Long-term financial goals
Why 20% Is the MINIMUM, Not Maximum:
The 50/30/20 rule suggests 20% as a baseline. If you can save 30-40% or even 50-60%, you're accelerating your path to financial independence dramatically.
Many successful wealth-builders in India routinely save 40-60% of income by:
Living modestly in the "needs" category (40% instead of 50%)
Limiting wants (20% instead of 30%)
Channeling the difference (40% instead of 20%) into investments
Example Calculation:
Monthly income (post-tax): ₹80,00020% for savings: ₹16,000
Allocation:
Emergency fund top-up: ₹4,000
Equity mutual fund SIP: ₹8,000
PPF contribution: ₹3,000
Additional loan prepayment: ₹1,000Total: ₹16,000 ✓
How to Implement the 50/30/20 Rule: Step-by-Step
Step 1: Calculate After-Tax Income
Use your in-hand salary (after EPF, tax deductions).
Step 2: Set Up Automatic Transfers
On salary credit day, automatically transfer:
20% to investment/savings accounts (make it disappear before you can spend it)
50% remains for needs
30% remains for wants
Step 3: Track for 2-3 Months
Use apps (Walnut, Money Manager, Excel sheet) to categorize every expense. This reveals your actual spending pattern.
Step 4: Adjust and Optimize
If needs exceed 50%, reduce them. If wants exceed 30%, cut back. If savings are below 20%, increase them immediately.
The 30% EMI Rule: Protecting Yourself from Debt Traps
EMIs (Equated Monthly Installments) are financial weapons—use them wisely and they help you acquire assets; use them carelessly and they destroy your finances.
The Golden Rule: Total EMIs Should Not Exceed 30% of Gross Income
Your total monthly EMI payments across ALL loans (home loan, car loan, personal loan, credit card EMI) should never exceed 30% of your GROSS monthly income.
Why 30%?
When EMIs consume more than 30% of income:
You become vulnerable to income disruptions (job loss, medical emergency, business downturn)
Saving and investing becomes nearly impossible
One unexpected expense pushes you into default
You're one crisis away from financial catastrophe
Future loan applications get rejected due to high debt-to-income ratio
Example:
Gross monthly income: ₹1,00,000Maximum total EMI: ₹30,000 (30%)
Current EMIs:
Home loan: ₹20,000
Car loan: ₹8,000Total: ₹28,000 ✓ (within safe limit)
If you take one more personal loan with ₹5,000 EMI:Total: ₹33,000 ✗ (exceeds safe limit—DON'T DO IT!)
If you want someone to assist you with your investments or spending and grow your wealth, feel free to contact us. Our team of experts will be happy to help. You can also email us at help@reymanwealth.com
Understanding Good EMI vs Bad EMI
Not all debt is equal. Some EMIs build wealth; others destroy it.
Good EMIs (Asset-Creating Debt):
Home Loan EMI
Creates appreciating asset (property value increases over time)
Tax benefits under Section 80C (principal) and Section 24 (interest)
Builds equity with each payment
Provides housing security
Education Loan EMI
Invests in future earning capacity
Significantly increases lifetime income potential
Tax deduction on interest paid under Section 80E
Often has moratorium period during study
Business Loan EMI
Funds income-generating activity
Can multiply returns far exceeding interest cost
Tax-deductible interest in most cases
Bad EMIs (Depreciating or Non-Essential Debt):
Personal Loan for Lifestyle/Consumption
Highest interest rates (10-18%)
No asset created
Pure consumption spending
No tax benefits
Car Loan EMI (Debatable)
Vehicle depreciates 15-20% annually
Maintenance, insurance, fuel costs add up
Often for "want" not "need"
Only justifiable if genuinely essential for work
Consumer Durable EMIs (TV, Fridge, AC, Furniture)
Zero-cost EMI is a marketing gimmick (cost hidden in product price)
Items depreciate immediately
Encourages buying things you can't afford
Better to save and buy outright
Gadget EMIs (Phones, Laptops, Gaming Consoles)
Rapid technological obsolescence
New models arrive before EMI is paid off
Creates perpetual upgrade cycle
Lifestyle inflation disguised as affordability
Credit Card EMIs
Converting purchases to EMI often involves 12-18% interest
Hidden processing fees
Locks you into long-term payment for short-term pleasure
Worst form of consumer debt
The SIP vs EMI Comparison: A Paradigm Shift
Here's a perspective that changes everything:
Scenario: You have ₹10,000 monthly surplus
Option A: Take EMI for New Phone
Phone cost: ₹1,00,000
EMI: ₹10,000/month for 10 months
Interest: ~15%
After 10 months: Phone worth ₹60,000 (depreciated 40%)
Net loss: ₹40,000 + interest paid
Option B: Start SIP Instead
Monthly SIP: ₹10,000
Period: 10 months
Expected returns: 12% annually
After 10 months: Corpus worth ₹1,05,200
After 20 years (if continued): ₹99 lakh
Net gain: Entire wealth created!
The choice is stark—EMI makes you poorer; SIP makes you richer.
How to Escape the EMI Trap
If you're already drowning in multiple EMIs:
Step 1: List All Debts Write down every EMI with interest rate, remaining tenure, outstanding amount.
Step 2: Stop Taking New EMIs Absolutely no new debt until existing EMIs are below 30% of income.
Step 3: Prioritize Repayment Use debt avalanche method:
Pay minimums on all loans
Put all extra money toward highest interest rate debt
Once highest is cleared, attack next highest
Step 4: Consider Debt Consolidation If you have multiple high-interest loans, consider consolidating into single lower-interest loan. BUT only if:
New interest rate is meaningfully lower
You're financially disciplined enough not to take new loans
Total EMI stays within 30% rule
Step 5: Negotiate with Lenders If facing genuine financial hardship, RBI guidelines allow:
Loan restructuring
EMI tenure extension
Temporary moratorium
Interest rate negotiation
Banks must offer these options before initiating recovery proceedings.
If you want someone to assist you with your investments or spending and grow your wealth, feel free to contact us. Our team of experts will be happy to help. You can also email us at help@reymanwealth.com
Controlling Spending: Practical Strategies That Actually Work
Theory is useless without practical implementation. Here are battle-tested strategies to control spending.
The 72-Hour Rule: Defeating Impulse Purchases
Rule: Before buying anything non-essential, wait 72 hours.
How It Works:
When you see something you want to buy, don't buy it immediately. Instead:
Take a photo/screenshot
Save it to a "potential purchases" list
Wait 72 hours
After 72 hours, if you still want it AND it fits your budget, consider buying
Why It Works:
Impulse purchase dopamine rush fades within 24-48 hours
Gives logical brain time to override emotional brain
Forces you to justify purchase rationally
Prevents shopping as emotional coping mechanism
Eliminates 60-70% of non-essential purchases
Exception: True emergencies (medical needs, essential repairs)—never delay these.
Delete Shopping Apps: Remove Temptation at Source
Strategy: Uninstall Amazon, Flipkart, Myntra, Ajio, and all shopping apps from your phone.
Why This Works:
Average person opens phone 80-100 times daily
Shopping apps use notification to trigger purchases
"Just browsing" always becomes "just bought"
Friction of opening browser and typing website reduces impulse buying by 70%+
Flash sales and limited-time offers lose power when you don't see notifications
What to Do Instead:
Keep one notes app. When you genuinely need something, add it to a list. Once a week/month, open browser, compare prices, and make planned purchases only.
Automated Savings: Pay Yourself First
Strategy: Set up automatic transfers on salary day.
Implementation:
Salary credited → Same day, automatic transfers:
Emergency fund: ₹X
SIP: ₹Y
PPF: ₹Z
Total: 20-40% of salary
Result: Money disappears into investments before you can spend it. You live on what remains—and surprisingly, you always manage.
Psychological Trick: You can't spend money you "don't have." By auto-investing 30% of salary, you psychologically earn only 70%—and automatically adjust spending accordingly.
The Cash Envelope System: Old-School But Powerful
Strategy: Withdraw monthly discretionary spending in cash. Divide into envelopes by category.
Example:
₹24,000 monthly "wants" budget → Withdraw cash, create envelopes:
Dining out: ₹8,000
Entertainment: ₹4,000
Personal shopping: ₹6,000
Fun money: ₹6,000
Rules:
Once envelope is empty, no more spending in that category
No "borrowing" from other envelopes
Leftover cash at month-end goes to savings
Why It Works:Physical cash makes spending tangible. Swiping cards feels fake; counting notes feels real.
Track Every Rupee for 90 Days
Strategy: Record EVERY expense, no matter how small, for 3 months.
Tools:
Apps: Walnut, Money Manager, YNAB
Simple Excel sheet
Paper notebook
Categories:
Housing
Food (groceries + dining out separately)
Transportation
Entertainment
Shopping
Subscriptions
Miscellaneous
Revelation: After 90 days, you discover shocking truths:
"I spent ₹12,000 on coffee shops?!"
"₹6,000 on unused subscriptions?!"
"₹8,000 on convenience food delivery?!"
These realizations drive permanent behavioral change.
Eliminate Subscription Creep
Strategy: Audit all recurring charges quarterly.
Common Culprits:
Netflix, Amazon Prime, Hotstar, Disney+, Zee5 (₹500-2,000/month)
Gym memberships (₹2,000-5,000/month)
Music streaming (₹99-199/month)
Cloud storage (₹130-650/month)
Newspaper/magazine subscriptions (₹500-1,500/month)
Gaming subscriptions (₹500-1,000/month)
Action Plan:
List all subscriptions with costs
Identify which you actually use (honest assessment!)
Cancel everything used less than twice monthly
Keep only 1-2 streaming services, rotate if needed
Share subscriptions with family/friends where allowed
Average savings: ₹3,000-8,000/month
The 30-Day List Rule for Big Purchases
For purchases over ₹5,000:
Process:
Add item to "30-day list" with date
Research thoroughly (price comparison, reviews, necessity)
After 30 days, if still needed AND budgeted, buy
If not, remove from list
Result: 80% of items never get purchased—they were wants disguised as needs.
If you want someone to assist you with your investments or spending and grow your wealth, feel free to contact us. Our team of experts will be happy to help. You can also email us at help@reymanwealth.com
Common Money Mistakes Indians Make (And How to Avoid Them)
Mistake 1: Living to Impress Others
Buying expensive car, branded clothes, latest phone to match peers' lifestyles.
Reality: They might be drowning in EMI debt you can't see.
Solution: Define success by net worth and financial security, not visible consumption.
Mistake 2: Assuming Higher Income Solves Money Problems
"When I earn ₹2 lakh/month, I'll save effortlessly."
Reality: Expenses magically rise to match income (Parkinson's Law of Money).
Solution: Build savings discipline NOW at current income. It's a habit, not an income level.
Mistake 3: Not Having Emergency Fund Before Investing
Starting SIPs, investing in stocks, buying insurance—but zero emergency fund.
Problem: First emergency (medical, job loss, accident) forces you to break investments, incur penalties, sell at loss.
Solution: Build 3-6 months expenses in liquid fund BEFORE aggressive investing.
Mistake 4: Confusing Wants with Needs
"I NEED the new iPhone.""I NEED to vacation in Maldives.""I NEED branded shoes."
Reality: These are wants. You'll survive without them.
Solution: Ask "will not having this threaten my survival or basic functioning?" If no, it's a want.
Mistake 5: Ignoring Small Expenses
"It's just ₹100 daily coffee."
Reality: ₹100/day × 30 days = ₹3,000/month = ₹36,000/yearInvested at 12% for 30 years = ₹1.06 crore!
Solution: Track small expenses relentlessly. They compound to huge amounts.
Conclusion: Financial Freedom Is a Choice, Not an Income Level
Controlling spending isn't about deprivation—it's about intentional living. It's choosing consciously where every rupee goes instead of wondering where it went.
The 50/30/20 rule provides structure. The 30% EMI rule provides protection. Automated savings provide consistency. Together, they create a financial system that works even when your discipline wavers.
Remember:
Earn more, spend less is non-negotiable
Good debt builds assets; bad debt builds stress
Small expenses compound to massive amounts
Financial discipline is a skill, not a personality trait
Start today, not tomorrow
You don't need to earn ₹5 lakh/month to be financially secure. Someone earning ₹50,000 who saves 40% (₹20,000/month) is wealthier than someone earning ₹2 lakh who saves nothing.
The choice is yours. The system is in your hands. The only question is: will you implement it? Start this week. Your future self is counting on you.
If you want someone to assist you with your investments or spending and grow your wealth, feel free to contact us. Our team of experts will be happy to help. You can also email us at help@reymanwealth.com
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