As I read blog What is a sale for? (48 hours) , I got reminded of my childhood where my father shared economics and commerce principles
1. Categorize expenses/items as necessary and luxury. The necessary included simple food items, simple clothes to wear, bicycle, books, shelter to live, education and health and luxury included television, tape-recorder, motor-cycle computer,electricity and motor-vehicles.
I remember the categorization of luxury and necessary & observe that luxury items of the past like backup generator, phone and micro-oven are necessary items of today.
2. Choose purchases based on “Value for money” approach. My father used to take me to santhai (market place) to purchase fruits and vegetables. He always purchased good quanity of fruits and vegetables that are in-season, available in large quanity at low price. To explain better, avoid off-seaon fruits and vegetables, available in small quantity at high price. This enabled us to eat all fruits and vegetables.
I use this approach in different perspective to book vacation at hill stations. Before 31 March, it is off- season and accomodation comes cheap, compared to rates on 1st April. No significant difference between last week of March & first week of April. .
3. Comfort and Convenience come at extra cost. In Santhai, he had made me observe that same items priced at high price in shops closer to the entrance was priced at low price when shop was deep inside the santhai. While I cribbed dis-comfort to walk a long distance, he explained cost addition for comfort need, adding “Once you are comfortable, it is not easy to go the other way. Keep away from comforts”.
Today I see that in name of comfort and convenience, new economy are created in terms of air-condition, app based cars, e-comemrce and so on.
4. Prepare a list before going to shop. Visit shop with a items list to purchase. Stick to your list. Avoid purchase of items not planned in the list. As money is present, do not perform instant purchases. Estimate money to buy items & carry little more than required cash. A practical way to control urge to make instant purchase and be aware of fluctuation of prices at shops.
Today I am cost and quality conscious. On windows shopping, I share to the shopping agent of my plans not to buy and recommend him to spend time with other custtomers. My kids presence does make me perform instant purchases.
5. More liquidity (cash in hand or savings account) leads to more spending. Track previous month expense, keep delta as emergency & save remaining as Fixed Deposit. This also protects you from instant purchased and buying without plan. Whenever we need money, we estimated the need and withdraw cash from bank.
Today I am aware of more banking functions than young people working in bank. There are no physical salary checks & salary is credited to our banks. Few visit banks due to presence of debit cards that allow access to entire money in the bank account. There are credit cards to allow access to money that comes from future earnings.