Money grows on trees if you know how to plant the right trees


Debt Management

The home loan market has expanded in the last two years. Affordable housing schemes, low interest rates and need for more space in work-from-home scenarios all contributed to the rise.

And now comes another rise to contend with – a rise in interest rates.

EMIs are set to increase and create pressure on household budgets.

What are the new money habits needed to manage debt well, in case you are affected by the hike?

It is not necessary to reach a debt zero situation. Debt habits need to change for better debt management.

How debt affects mental health is another point to be considered. Hence, the need for better money habits cannot be over-emphasized.


1. BNPL Schemes

Start small.

How many BNPL schemes are you enrolled in, because you clicked on an available option while paying?

It’s true that no interest is charged, if you pay the bill on time. But too many loan accounts leave an adverse impact on your credit score.

You are likely to miss a due date if there are too many bills to be paid.

2. Credit cards

Keep your credit cards if there are no annual charges. Use a little money from all cards, so that you don’t max out any.

Ensure that percentage utilisation of available credit limits is low.

Don’t cancel credit cards because it will reduce the overall credit limit. Consequently, the percentage utilisation will increase with the same amount of expenditure.

Needless to say, pay full amount on due date. Automate bill payments, so that you don’t inadvertently miss a payment. Do not fall prey to the Minimum Amount Due syndrome. It will land you deeper in debt.

3. Budgeting

Budgeting is imperative if increased loan instalments are creating a pressure.

Use a diary, an excel sheet or a budgeting app whatever is convenient.

Sticking to the budget may overrule purchase of new assets or indulgence in impulse buying.

A lower budget may imply changing means of transport, eating out habits, annual subscriptions or a reduction in holiday or entertainment expenses. It will need a change of mindset and new habits.

4. Automate all bill payments

This will ensure that you do not pay any penalty for a late payment.

5. Create an emergency fund

An emergency fund prevents straying from the budget.

6. Evaluate balance transfers

Check fixed rate options in a rising interest rate regime.

But be aware that it binds you for a long time. What if the floating rate next year is less than the fixed rate you opt for? Pre-closure of a fixed rate loan attracts charges, so it will restrict options for further balance transfers.

There is no one-size-fits-all solution. So, options need to be evaluated as per amount of debt you owe, rate of interest, your age and household income.

7. Be careful in availing fresh loans

Stay away from credit card debt and personal loans.

If you need money, look at gold loans, top-up in home loans or loan against property which are comparatively cheap.

8. Settle some debts with full payment

You may choose to settle the small amounts first or the loans with highest rate of interest. It depends on how much money can you spare.

9. Make prepayment a habit

Use all additional inflows such as a performance increment, bonus, incentive or a large windfall in business to prepay a certain amount of debt.

It keeps the interest burden low in the long run.

Decide wisely which debt to settle first.

10. Rebalance your investment portfolio

Check the real rate of return on investments. It means that investments should yield returns higher than the interest you are paying or to combat inflation.

If this is not the case, you need to reallocate funds to stay afloat in the long run.

11. Review financial goals

Maybe you have to wait longer to buy a second home or something else you had planned for.

You need to plan how to manage within existing means.

If you are stopping a SIP to pay the increased EMI, it will affect your long-term financial goals. Check the time in which you can get back or track, or if you can compensate for that by generating a higher return somewhere else.

FD rates will also increase along with your EMIs. Closing FDs running at lower rates and booking them again at the highest rate for a longer term will help in the long run.


Money Goals

How many books on investor behaviour have you read so far?

I can recommend a few outright

  1. Behavior Gap, by Carl Richards
  2. Psychology of Money – by Morgan Housel
  3. The Compound Effect – by Darren Hardy

The common thread running through all the books is about

  1. keeping your focus on the long term, and not getting waylaid by short term developments.
  2. staying focused on your life goals rather than the economy or something you cannot change.

Where do habits fall in the picture?

Habits are short-term acts, which help in retaining control on long-term goals.

It is what I can do today.

Then why is it so difficult to form money habits and stick to those?

Is it that we don’t know what to do? We know. We are being bombarded with information from all sides.

We may not know what to choose. And that is because you are not clear about your goals.

We treat money habits like New Year resolutions that do not last beyond the first three weeks of January.

What stops us?

  1. Lack of faith

What’s the point? I’m going to fail any way.

2. Rationalizing

Skipping it once won’t make much of a difference. The amount is so miniscule anyway.

3. Avoidance

It’s overwhelming. I can’t be counting beans all my life. I’m not cut out for this.

4. Fear of being judged

What will they think about me (repeating clothes, driving an old car, not giving an expensive gift)? I can’t explain my financial compulsions to the whole world.

5. Defensiveness

I can’t help it. Unexpected guests will arrive. My kid always finds something new in the market that s/he can’t do without. My wife will never stop shopping for things not needed.


I know a couple who never lets me complete a sentence, if it brings an idea that seems alien to them. The immediate response is

“We don’t do that or believe in it.

We have never done it.”

And they haven’t even heard what I have to say. It is annoying.

But the one thing I learnt about them is that they have a very strongly defined self, and they don’t let anyone or anything change it. Their self-perception is aligned to whatever they wish to achieve, and they are able to firmly stay on the path.

There is a process of observing, learning, sorting out what you need from the sphere of influence, and then firmly sticking to the chosen path.

Yes, a review is needed. But only when circumstances change. Otherwise, the positive results (however small) should keep you firmly on track.


  • I value myself, and I won’t be at anybody’s mercy in times of need.
  • I don’t know or don’t care about what others think. I’ll give it a try.
  • I will put in my best effort and get the best results.
  • If others are using my resources, they need to respect my decisions about it. Peace in relationships is not a one-sided process.
  • Life is short, and I can’t afford to fail on my own expectations.
  • I cannot keep everyone happy, so I might as well please myself.


  1. What will I gain if I succeed?
  2. What will I lose if I succeed?
  3. What will I gain if I fail?
  4. What will I lose if I fail?

All your motivation and conclusions lie within the boundaries of the answers.

If you enjoy listicles, here are 40 short habits with a high return on investment.


The habits that stick in the long run are the simplest ones.

A simple life is not seeing how little we can get by with—that’s poverty—but how efficiently we can put first things first. When you’re clear about your purpose and your priorities, you can painlessly discard whatever does not support these, whether it’s clutter in your cabinets or commitments on your calendar.

Victoria Moran.

Reading books and learning online are good habits, but how much of the knowledge gained is actually imbibed into our lives?

Setting financial goals and finding the simplest way to reach there is undoubtedly the 20% effort which will deliver 80% of results.

Related post: 80-20 rule in personal financial planning

Complexity is a cover to prevent people from reaching the truth. It is often used by celebrities to keep a mystique around themselves.

At home, the family will respectfully leave you alone if you talk about complex money management theories and investment strategies. They will ask for money to fulfil their needs, and leave you alone with the rest.


1. Go by thumb rules

Thumb rules are created to help easy adoption of complex principles.

Understand that these are not universally applicable, and will not work in the same manner for all. Twist and turn to suit your needs, as you acquire financial sophistication.

Till then, the thumb rules keep you on the right track. It is like having a map or compass, when you don’t have GPRS on your phone.

2. Don’t always wait for the best

I’m always amused by certain questions on platforms like Quora, “Which is the best …(plan, scheme, item etc.) for ….?”

There is no best till I know your goals, resources and risk appetite.

If I cannot afford a Lamborghini today, do I go without a car or buy something to suit my needs and budget? Let dreams continue to push you, but being on the road is important. Plans gain momentum only when they are already in action.

Don’t let the lack of best become a hindrance to attaining good. Start with whatever is available.

3. Take an annual view

Budgeting is a tool for anyone with finite resources and infinite wants. But budgets are often created weekly and monthly, and block the annual or long-term view.

You know what is your net take-home pay and you know what are your monthly expenses.

  • Have you provided for taxes, insurance premiums, tax-saving investments?
  • What about replacement of lost or damaged goods?
  • You want your annual holiday, weddings in the social sphere or the trip taken to meet a family member who needs you?

The 20% or 30% you save cannot all go towards long-term retirement plans. You first need to put money aside for annual expenses, and then commit to other goals.

4. Checklist of questions

You zero down on an investment plan, and decide to put your money in it.

As we say above, it is important to start somewhere and not always wait for the best. But since it is difficult to withdraw money from investment plans without incurring a loss, you must have a basic checklist before making a commitment.

See if you can tick at least 80%-90% of the boxes, before saying I do.

The first set of questions should be about how it meets your financial goals within the existing resources.

The second set will be about what the investment plan gives you.

The third is to know the actual returns after deducting costs. You must know all kinds of fees, charges and penalties levied by the company you are investing in, to avoid unpleasant surprises.


Modalities are methodologies of doing things. You have a goal. You make a plan by figuring out the best route to reach there. You start acting on it.

Sub-modalities are the little things you do every day, every week to keep up the momentum.

Money habits for success and all that we have been talking about are these sub-modalities.

What spurs you on? Of course, everybody identifies and adopts it.

What stops you from being on the desired path? You must know this and work at eliminating the blocks to succeed.

Spending habits, saving habits, entertaining habits, money consumption habits, communication habits, relationships all become the sub-modalities to become Smart Money Habits.


A survey of the Japanese scene won’t show it as a very conservative society. They hunger for luxury items and electronic gadgets, pay a premium for rare objects seen as status symbols and are careful about how they dress and look.

However, the Japanese can be differentiated from others in two ways

  1. Connectedness to roots and heritage
  2. Mindfulness

New entrants to Japan are astonished by the way locals discard used stuff on the streets. There is no market for preloved goods. Is it a sign of prosperity, or insouciant wastage?

A possible reason could be availability of new goods at affordable costs, and hence, unwillingness to pay for used goods. Or it could be their way of striking a social balance – let the needy find something worthwhile without having to beg for it.


The Japanese money management system is called Kakeibo.

Related post: Kakeibo-Japanese Art of Money Management

Indians have traditionally had their ’bahi-khatas’ (ledgers) for business and ‘hisab ki diary’ maintained by our parents and grandparents. However, it was a method for recording expenditure, and gave a post-event view.

Kakeibo starts with the same concept – just record all items of income and expenses for some time. Expenses are divided into four categories – needs, wants, culture (entertainment) and unforeseen expenses.

The method extends further to conscious spending.

  • Write down your goals.
  • Decide on a savings goal.
  • Apply thought before spending money. Are you in sync with your goals?

There is a financially aware section of youngsters who choose to spend time to save money, rather than spend money to save time.

Doesn’t the latter summarize all our so-called convenience expenses?

There are soft copies and electronic versions of Kakeibo available, but the original Japanese method is to write in a notebook by hand. They believe that writing by hand connects the mind to the word better, and people are more likely to follow the rules.

It gives an opportunity to reflect and act.


Kaizen is the art and science of making small improvements to overcome habits.

The human mind suffers from a negativity bias. We believe in the negative easily, and give in to fears and insecurities. Hope and positivity seem less real. Marketeers take advantage of this propensity to induce spending. They exploit insecurity, and the need for social acceptability. They induce FOMO (fear of missing out) to get those bucks out of your wallet.

One can overcome this bias by inducing mindfulness.

  • Do you seek relief from stress and boredom by spending money on food or clothes? Most of us do.
  • How does one overcome the temptation to spend money online, on things you don’t need?

Follow the small steps delineated in the page shots on the left. These are excerpts from the book “Kaizen – the Japanese method for Transforming Habits, One Step at a time.”

  • Induce small changes.
  • Eat at home on at least weekend in a month.
  • Create one new outfit by combining existing garments, and making it look different.
  • Cut down on connoisseur ice cream and enjoy fresh fruit pulp.

Find some more useful steps to save money here.


We focus on spending and saving while developing or reforming money habits. We learn about the right investments in money strategies. What we tend to ignore is that conservation of financial assets we  own is equally important.

Insurance is touted as the solution to all concerns on risk. Undoubtedly, insurance is a strategy to compensate for loss.

But we also need to develop safe habits, while doing our money transactions, to prevent loss.


Let us accept that money is now digital. We need to accept the risks associated with digital transactions.

“One of the main cyber-risks is to think they don’t exist. The other is to try to treat all potential risks.

Fix the basics, protect first what matters for your business and be ready to react properly to pertinent threats. Think data, but also business services integrity, awareness, customer experience, compliance, and reputation.”
― Stephane Nappo

“Risk comes with the territory when you are breaking new ground. Learn how to evaluate and mitigate these risks rather than take away people’s power and autonomy.”
― Leena Patel, 
Raise Your Innovation IQ: 21 Ways to Think Differently During Times of Change


Develop small habits that become part of your lifestyle. Don’t feel humiliated by snide remarks on being over-cautious or paranoid.

  1. Let your money age. Spend it a certain number of days after receipt.

It earns interest and over a period of time, gives compounding benefits.

2. Before making an online payment or any financial transaction, switch the network from wi-fi to a mobile hotspot.

It protects your data against being hacked.

3. Delete all financial data such as SMS alerts, images of KYC or other sensitive documents, immediately after having used those. You can keep those safe as attachments in email, to be downloaded as and when required.

The apps on your phone cannot access the data. Be careful with Google Drive. Certain apps ask for permission to access your Google accounts, and data on the drive should not be considered safe.

4. Delete all the apps which are not in use. You can download them again when needed.

It prevents unnecessary leakage of data on your devices.

5. If the phone is over-heated or battery runs out rapidly with normal usage, get an anti-virus installed immediately. Check transactions in your bank and credit card accounts.

It indicates that someone else has access to your phone.

6. It is a good idea to let apps be updated, as the latest versions are designed to meet new challenges.

Updates do occupy extra space, but you can counter it by deleting unnecessary files.

7. Change passwords regularly, even if the platform does not compel you to do so.

Learn methods to generate passwords you can remember, and are complex for a hacker at the same time.

8. Set passwords for new platforms carefully.

You need your email id to sign up on a new platform. Ensure that you do not use your email password here. It protects your email account from hackers.

9. Have a separate email account for banking, insurance and other investment platforms.

Do not use this email id everywhere.

10. Check bank statements when received in mail.

Look out for unusual transactions that you are not aware of. It can be anything from charges being debited to money withdrawn from an ATM.


1. Think of alternates

What will be the cost of buying the same thing or something that fulfils the same need from some other platform?

An iPad Mini gives me the benefit of a larger screen for reading books, but cannot be used to make a phone call. Maybe a phone with a large screen is a better idea, than investing in two devices.

Is the same device available on rent? The model getting outdated will not affect me.

2. Think of returns

An asset is something that can be converted to cash and/or generates an income for me.

A liability is something for which I incur a recurring cost, like a car or a rented house.

The difference should always be clear.

We should focus on increasing our net worth, instead of increasing income.

We need to work for ourselves, not just for companies (utility bills and shopping), banks (loan instalments, charges and credit card bills) and real estate agents (commissions and rent).

3. Think of future cost

Buy Now Pay Later or swiping a credit card is easy.

How much more are you paying to buy on so-called easy instalments?

How much more will you pay, if you fail to pay the full amount on the due date.

Debt drains future prosperity.

4. Do everything in a small measure

Deprivation leads to binges.

Spend on your passion, entertainment and emotional needs to a predefined extent. If needed, compensate by cutting down something less important to you.

5. Make your family a companion on your wealth journey

Share your ideas and future plans with them. Inculcate a sense of anticipation or pride in what they will own at a later stage in life.

Enrol them in financial literacy courses, if you feel they need inputs on money management.

Talk about money. Have a money conversation at least once in a week.


You watch the videos and read listicles on good and bad money habits every day or every week. So much so, that you are likely to stop reading beyond a certain point, because you know what to expect.

Your mind is bored of repetition, weary of information overdose and hardwired enough to keep you where you are.

And this is where you fail to bring about change….

It’s like you know smoking is bad for health, but continue with it. Statutory warnings are everywhere in fine print. The sellers are fulfilling a legal obligation. Why should it pull you out of your comfort zone?


So am I … who are you to tell me that?


What the hell is happening here? I need to crack this puzzle.

What got you charged here? An unfamiliar set of alphabets put together in a weird manner arouses your curiosity.

Have you been feeding anything new to your tired brain?

Your thoughts become algorithms for the future.

If you come across something unfamiliar, you need a new software to decode it, and you develop it in the neural pathways of your brain.


What did you do when you first learnt how to read?

unseen nuances

call for attention, attract

untrained eyeballs

Does it pique your interest? Maybe, yes. Maybe you find it irrelevant to the topic. Hold on…

What happened when you learnt to write? You actually learnt to draw an image of the alphabet.

I learnt to

hold tools the right way

draw a shape

meet the world

where language began

to start communicating

What has this got to do with Money or Money Habits?

See how money plays heavily on your mind – the riddle you cannot solve, the burden you want to shed, the excel sheet which is not your style, the math you shunned from childhood.

Start with something unrelated.

  • Read a book in a different genre than your favourite ones.
  • Play a different game with your child. Watch how she reacts, and watch how you change with her response.
  • Visit websites different from the regular ones.

Your mind is priming for change.

Now, let’s get down to money.

  • Plan an outing in a nearby place of natural beauty on the weekend, rather than your weekly ritual of visiting the mall – to shop, watch your kid play a game you don’t enjoy and eat food cooked with standardised recipes.
  • Learn a new recipe and cook. Watch your family appreciate or encourage you.
  • Pull out all the clothes from your closet. Put them together in different ways to create new outfits. Invite ideas and opinions.
  • Check out the AC bus service or metro, and commute without cursing other drivers in a traffic jam.

Did you enjoy?

You’ve also saved money.

The idea is to trick your brain out of ingrained patterns, stop your hand from hitting the same buttons on devices, and to rewire Habits (then, Money Habits)

The mere exposure to things novel can be enough to have your brain automatically release the shackles of past experience, and make new judgments and connections.

Henk from the Heart Math Institute

I will let Henk summarize it for you.

  • Change your environment
  • Make new acquaintances
  • Seek new information and vantage points


And now I add my two bits to it.

You don’t have to believe what I say. I’m not one of those coaches who tell you,

“I did what my mentor asked me to do, and you need to do the same for success.”

I learnt things the hard way, but it was my own way.

  • Challenge every opinion and thought you come across. See what lies on the other side.
  • Provoke your own thought patterns. What would be the scenario, if you tried something different?
  • Compile conclusions that emerge. They need not match pre-existing patterns.
  • Choose the best one to meet your goals.
  • Be prepared to divert whenever you hit a roadblock. Adaptability is the key.

Money habits need not be a religion.

But if they help you achieve what you want, unconsciously they become a religion.


Money does not dictate your lifestyle. It’s what you do to get it and how you manage your finances that determine your lifestyle.

Wayne Chirisa

Most of us in India cannot differentiate between a financial advisor and financial coach.

The entities we commonly deal with are fee-only financial planners, financial advisors or mutual funds distributors. Some of us plan our investment strategies based on free advice doled out in social media groups or investing apps.

There are some who have moved a notch ahead and undertaken financial literacy courses.

Yet, none of these resources address your mental, emotional and financial needs at the same time. We have an excel sheet with a plan, but are unable to adhere to it.

Procrastination is rebellion of the soul against entrapment.

And why does the soul feel trapped? There is something in the plan that does not go with our psychological needs. There is a mental block you are unable to explain. There is a family problem you are unable to share.

Forming the right money habits is what we talk about in this series, but which habits are right for you? Is there a way to meet your financial goals, without moving a mountain?

Money and relationships are the most confidential part of an individual’s life. We hear more about relationship problems being discussed than money problems in public.


All of us know people who

  • struggle with managing money after losing an earning member in the family
  • struggle with adhering to a budget or investment plan
  • regret the emotional decisions they take regarding investments
  • are burdened with debt
  • want to plan their lifestyle or retirement in line with their passion and value system
  • strive for financial wellness rather than a high net worth
  • suffer from a shopping addiction
  • are unable to say No when others ask for help


A financial coach is a non-judgmental companion to help you on the path to financial wellness. S/he is a certified life coach with a background in personal finance.


  •  They ask you to state your problem or desired outcome as you see it.
  • Then, they lead you to view the actual situation through a series of questions and a heart-to-heart conversation. The coach is totally non-judgmental and just gives a direction to your thought process.
  • It is possible that the real source of the problem lies elsewhere, than the place you perceive it.
  • The financial coach will then give you exercises, activities and questionnaires to help you figure out where you are and where you want to reach.
  • Now, comes the second part of devising a plan to meet your financial goals.
  • You chunk your goals into smaller parts, and make a step-by-step weekly or fortnightly or monthly plan. This could be a budget or a conversation you need to have with stakeholders in your life.
  • The coach is there to hand-hold and monitor your progress. S/he follows through your progress, and helps you get back on track if you falter.
  • The entire exercise is done through face-to-face interactions in person, on phone or through video conferencing as per your comfort level. I know people who are more comfortable talking on phone when they are not being watched.
  • The exercises and questionnaires can be delivered through email or any other mode of communication.

We advise an engagement of 6-12 months, with fortnightly or monthly interactions.


A financial coach solves a problem at the root.

Financial coaching helps you integrate the financial plan with your personality, such that it becomes a lifestyle rather than a task to be executed.

In case of a stubborn mental block, sessions with a hypnotherapist can be arranged.

Contact Reena Saxena for more at, or


Financial planning is 90% mindset and 10% technique. Financial wellness is 100% mindset.

The feeling of being comfortable with your money situation is priceless. It eliminates the root cause of many other conflicts in life.


But many of us avoid meeting a financial planner – for weeks, months and years – at least for the first time.

The nagging thoughts are

  • I’ve not been on the right track, and I’ll look like a fool.
  • Gathering all financial details will take a lot of time.
  • I can’t share all personal concerns and family conflicts with an outsider
  • I don’t want to be bound by a plan. I want my freedom to spend or give.
  • How much will he charge?
  • The advice may be biased in favour of products they endorse.
  • Do they have a minimum income or minimum corpus norm? Will I fit into that?
  • I need money outside the investible corpus, where the financial planner cannot dictate terms.
  • Bean counters working on excel sheets don’t understand the emotional and relationship complexities we function in.
  • They’ll be judgemental about the investments I’ve already made.

Procrastination is the soul rebelling against entrapment.

Financial planners do ask for a lot of details

  1. Financial goals
  2. Risk appetite
  3. Risk coverage
  4. Monthly expenses
  5. Time horizons
  6. Expected rate of return
  7. How much can you afford to lose in a market crash?

Let us deal with the psychological discomfort first.


The information we hide from others and sometimes ourselves is our expenditure on ‘wants’.

What others see as ‘wants’ may be ‘essential’ for us, because of the psychological comfort it gives. We are addicted to lifestyles and do not wish to dilute. Clothes, accessories, cigarettes, alcohol, eating out, beauty salons, holidays are all a part of it. Someone in the family circle does not approve of your so-called fetishes.

So, you hide the information in whatever manner you can. I know women who hide the 46th pair of shoes or the twenty-fifth handbag they bought today. Guys may flaunt a Blue Label amongst their friends, but not look in the wife’s eye, while placing it in the bar.

And talking about it to a rank outsider is scary.


Sujay met a financial planner for the first time with the following numbers

  • Financial goals
  • Minimum monthly expenses
  • Time horizons

It turned out that the amount he saves is not enough to meet financial goals in the desired time frame. The only way out was to cut down on expenses. Now, this is bitter medicine.

The FP’s face looked like that of a doctor, putting him on a strict diet.


Financial goals do not materialise in thin air. They reflect the state of our relationships, individual priorities and a deep-seated value system.

Rachna wants a house of her own, before they have a baby. But revealing this will create friction in the joint family where she lives now. She is not sure if her husband will stand by her, so she has never broached the topic with him.

She fears a concrete investment plan, as her preferences will be out in the open. What if the discord becomes too much to handle, and she wants to roll back her dreams?

Yet, the yearning for her dream nest continues to haunt her. She stacks up money in her VPF and bank deposits, but is not sure how will it help.


Take one small bite at a time.

If you need to collect financial details, do the insurance part in this month, bank statements and loan accounts in another. In 3-6 months, you will have the data in one place. It will be the foundation stone of your financial plan.

If you need to talk about something, start dropping hints. Narrate the stories of friends and relatives. Talk about your childhood and what drives you to spend more or less now. It will prepare the ground for much-needed conversations.

If you know what should be done, but tend to do something else. Engage a financial coach. A financial coach is a coach with a background of personal finance. S/he will help you move certain things from subconscious to conscious level. Knowing the problem helps you decide what to do with it.

The financial coach can help you in devising a financial plan without recommending specific products or selling anything.

We’ll talk more about the role of a financial coach next week.


money habits
Money Habits
Goalgetters-Psychology of Money
Book Summary – Psychology of Money

Download the book summary free here

Do we need to wait for that one life-changing incident, which makes a permanent change in our brain structure, and we are never the same again?

It may not happen. But the daily pains and struggles are real, and speak of a need to change.

Have you ever been in any of these situations?

  • You stay awake wondering how you will finance your child’s education, your mother’s treatment or that dream house.
  • You want to buy something. But you control the instinct and postpone the idea. 
  • You’ve read a book on wealth generation or power of compounding, and realize that you missed out on so many opportunities.
  • You meet a friend after many years and admire the way he managed his money. You are inspired to do the same.
  • You would like to set an example for your children with positive money habits.


Needless to say, the goal needs to be clear. Let the destination recommend the path. Money behavior needed to set an example for your children can be vastly different from saving money for a fancy car.

My writer friend Jude Itakali says,

These paths be lonely, these paths be watched.
The destination must fuel the journey

I would recommend that you spend 3 minutes on taking this test, and get a snapshot of unfulfilled goals.

Wheel of Life

Take a screenshot of the results, or save it as a pdf. This one page tells you where you need to expend more effort in your life. This is generic.

Converting each gap to money goals with a time frame will make it more specific.


The mind can never be idle. Through meditation or creative visualization, one only replaces the negative with positive, the useless with productive, the dormant with active thoughts.

The same applies to behavior or habits. One cannot not do anything. The idea is to do the right things.

Jamie feels that he is spending too much money on transportation. But he cannot quit the job. He needs to go to work every day. Finding a job close to his house will help, but may not always be a viable option.

What are the options?

  • Can he switch to car pooling, taking a comfortable AC bus or metro?
  • Can he replace his car with a more fuel efficient one?

Figuring out different options and giving them a try will take some time. He will get used to the new lifestyle at some point of time.

  • Watching the savings accumulate in his bank account will encourage him to continue with it.
  • The relief of not having a debt recovery agent remind him about missed EMIs will further cement the behavior.

In case there is a problem with the new option, and he has to switch back to driving alone, what is his Plan B?

  • If he has been eating out for lunch, can he carry homemade food?
  • Can he discontinue the subscriptions he is not using – like Netflix or Bloomberg Quint or the gym membership?

Needless to mention, Jamie may miss his companions from the car pool or metro, and want to get back to the same routine again.

He chooses more than one option of saving money, and manages to pay for his child’s hobby classes. Watching the child blossom in his new found talent is such a pleasure. It makes all the tweaks in lifestyle look worthwhile.

Note that I refrain from using the word ‘sacrifice’ here. Sacrifice has negative connotations. You don’t want to live with a crown of thorns and go down in history as the most unappreciated parent or spouse. You want to make happiness more inclusive and share it with everyone.

Jamie may need to let his family know about what he is doing. It will help them be careful with money, and devise new ways of maximizing wealth.


  • A change takes research and time. Don’t expect overnight results.
  • Rewards encourage behavior, till it becomes an entrenched habit. If I do something for 30-45 days continuously, I miss it on the 46th day. I want to keep doing it, because it has become a part of my DNA.
  • Track results. Check your savings account and loan account statements. If the changes look small in the beginning, remember what lessons on the power of compounding say – results are exponential towards the end.
  • Reasonable can overtake rationale, as Morgan Housel says in his book “The Psychology of Money”. We are not a spreadsheet, we are human beings – screwed up, emotional human beings. 
  • It does not mean that we never make a plan. It just means that we make a provision for diversions. Have a Plan B and Plan C. Invoke the backup plans only if needed. Even if you never have to do it, Plans B & C give a sense of comfort, that you have something to fall back on.
  • Include your family or friends in your plan. Execution becomes easier, when others do not pose a challenge to your efforts.


In the previous article, we discussed triggers which call for a change in money habits. It means that as long as there is no problem, one does not think about changing money habits or any habit. It is either a problem, or a strong desire to be in a better place which catalyzes change.

But some people ask if it is possible to control spending habits. We’ve said before that money habits are set by age 7.

The truth is that there is no one-size-fits-all solution applicable to all. The only common factor is the realization that one needs to change.


Each child is born into a different set of challenges. We don’t have to assume that only lack of resources is a challenge. The problem of plenty is also a challenge, as the kids have not learnt to work in a scenario of limited resources. Spending habits of millennials testify to this, as they are born in an era when money flows through devices, rather than savings accounts or piggy banks. Easy access creates a different set of habits than what their parents did.

I came across an intriguing statement from an heiress to a fortune. She said she feels inferior around people who have earned their fortunes, because she wouldn’t know how to do it. So, she gives away money in charity to assuage guilt. But this behavior pattern by itself may be destructive. There is a Hindi saying which goes that even ‘Kuber ka Khazana’ will be emptied out, if one does not add to it.

The financial sentiment formed at an early age becomes the basis of money habits. Most of the adults we meet have not been educated in money management by their parents or teachers.


Many people have made mistakes in early stages, which may take a long time to overcome. Research shows that people who are in a financial mess, share many behavioral traits. The listicles on how to stop bad spending habits are often a summation of these.

We learn from collective experience. But one may not need all of those measures. Or one may need something different from common solutions. There is no point straitjacketing ourselves in a templated system, when it is possible to enjoy a higher degree of freedom.


What is needed for change is a customized money management system.

Needless to say, a system based on hard core financial information and excel sheets alone will not suffice.

A financial coach needs to address established behavior and habits.

The system needs to be customized to suit the individual.

For example, a financial coaching conversation can start as follows.

  1. What is it about spending money that makes you feel good?
  2. What will happen if you do not indulge in this behavior?
  3. What do you foresee as happening if you do not change anything?
  4. If change is needed, how committed are you to make it happen?

We are talking emotions here. Creation, implementation and monitoring of a financial system starts thereafter.

So, you see emotions and how you manage those are the driving force of change.

Again, you have two choices.

  1. Give in to the prevailing emotion of the moment. Your amygdala is dictating terms and you follow.
  2. Disagree with the prevailing emotion. Don’t rationalize it. It opens up new avenues of thought.

Any number of listicles cannot help, unless you go through this fundamental process.

We will see more real-life examples in our future discussions. Stay tuned.


Whatever we call personality is a sum of our habits. It is how people see us, and form impressions about us.

And we are fine with it.

Why should I want to change, if my life is smooth, and I don’t cause harm to anyone else?

Smoking and drinking are great fun habits, till they attack our wellness at a physical, financial or relationship level.

The time we spend watching television or scrolling social media feeds mindlessly is entertaining, till other parts of our life suffer.

Spending or saving money gives a high. Why should it be a problem, if I use my own money and banks are competing to give me a loan?

What is that turning point in life when one feels a need to change? And meaningful change does not happen, unless one reaches this point.

There are two types of habits: ones which comfort us, and ones which would be a comfort if we stopped.

Catherine Pulsifer

Salman Khan once admitted to becoming more careful with money, when his father told him they won’t have enough to pay medical bills in case of a serious illness. His estimates about what he owned were drastically incorrect.

I read posts from women in social media groups. They start counting money when the marriage fails and they are on the verge of separation. Money is taken for granted before that.

We are all conditioned to think about money in a certain way, as per T. Harv Eker

1. Verbal

 By listening to statements made about money

2. Modelling

We behave in the same way, or in the exactly opposite manner as we have seen our parents behave. The stance we take depends on our personal equation with them.

3. Blueprint

A blueprint can be identified and changed.


Let’s look at some common occurrences when people feel a need to create healthy money habits.

  • At a point close to retirement
  • When you want to set an example for others
  • During employment gaps
  • On becoming a victim of fraud or cheating.
  • After suffering a loss or downturn in business
  • When Black Swan events alter your net worth
  • You are strongly influenced by a mentor
  • You’ve been denied a raise or a share in inheritance,
  • Perspectives change at the fag end of life
  • Spirituality or ascetism make you believe you can survive on much less

In short, a belief system is changing. Your assumptions and dreams are changing.

Your money blueprint is changing.

You know doing the same things will not yield different results.

Congratulations if you have reached this point!

Habits are never-ending goals, if you think about it. They have no deadline and no end point. They are casual daily activities like brushing your teeth or combing your hair.

Zoe McKey, Rewire Your Habits


A friend shared an incident about giving her extra gas stove and a laundry iron to the maid. The maid’s son sold both the items for Rs.100/- and had an ice cream with the money.

The man who bought it started ironing clothes on a table in a residential area to earn money. His wife used the extra gas stove to make idlis (steamed snack), which she sold in packets with home-made chutney (a dip). 

Financial literacy levels and spending habits of millennials can be shocking. When I ask students what they will do with a bonus of Rs. 1 lakh, most of them want to buy a MacBook and an iPhone, and complain that the amount will not suffice. Only one guy presented a business plan of selling tea and snacks on a handcart, and then buying the coveted laptop and phone with the profits, after six months.

There are many such examples of money consumption habits. They just highlight a fundamental reason.

What keeps one rich or poor or middle class is a short-term or long-term perspective.



A seed cannot grow into a tree, if it is consumed. Money does not become wealth, unless it is saved and invested.

There are subconscious reasons for seeking immediate gratification. It can be suppressed desires, a difficult childhood, FOMO (fear of missing out) or peer pressure.

Reckless use of credit cards and Buy Now Pay Later schemes, personal loans for a vacation are all offshoots of this mindset. People spend their future income. Money grows, but in the lenders’ bank accounts who earn hefty fees and interest on the deals.

Decode your Money Habits here

The first step is to recognise and acknowledge the cause. One can work on solutions later.


The commonest question on Quora or other social media platforms, is about having money for habits, about getting that extra income to save and invest. What does one do in a hand-to-mouth situation, when the entire income is spent on fixed costs?

The concern is genuine, and calls for ingenuity in finding resources and opportunities. 

A business head ridicules team members who do not earn incentives. The derisive remark in review meetings “How can you survive on that measly salary?” makes people see red. Some go on the defensive and say they are not greedy.

I took some time to figure out that those who worked for incentives had a growth mindset. They had learnt how to make an extra buck to invest, which would yield returns in the long run.

There is an old Marathi saying that the woman of the house should earn a minimal amount, equivalent to salt in food. The logic is about financial contributions from every capable member in the family.

A lady boasts about how they never gave pocket money to their chartered accountant son. He had learnt to manage his expenses on the small stipend that he earned during article-ship. Summer jobs and paid internships have gained acceptability now. There is no shame attached to working for money. Children become financially literate in the process, and pay for the small comforts or luxuries they crave for. They may also learn to invest.

Actors and cricketers who invest money in other businesses know their success and career is short-lived. Needless to say, they emerge strong even after a professional lull. Their money works for them. They don’t have to work for money all the time.

Having multiple sources of income is not only about part-time jobs or side hustles. Rent, interest, dividends all count as sources of income, but need capital. The money for capital needs to be earned and saved.

How to control spending habits? It needs a budget.


Some of us have grown up with a mindset that an overflowing refrigerator and overflowing wardrobes indicate prosperity. The thought of clearing up gives us goosebumps, because less is scary, less is poverty.

We tend to miss the point that those who buy just enough for needs, and sell what is not needed have overflowing bank accounts. We need to make space in the cupboards for prosperity to find its way in, not overload them.


There is a social system which works at making you spend to maintain standards set by others. Weddings and ceremonies are just one example. 

There is a financial system which lures you into borrowing by seemingly attractive deals (Pay only a minimum amount now…). They devise schemes with free credit for a limited period, to inculcate the debt habit. BNPL is available for ordering food on Zomato to buying consumer durables. 

The mental image of pride and satisfaction gained after spending that amount overrides the view of interest to be paid. It makes you poorer in the long run, but the darker image has escaped your radar.


I’m horrified to see the amount poor people spend on godmen and exorcists, to solve every problem in their lives. It gets them nowhere, but the faith remains intact. They buy hope, and miss out on financial well-being.

50 Cent, an American rapper went broke in 2016, when he had to pay $23 million dollars to his creditors. His stance was that celebrities need to maintain a public image. His present net worth shows as $30 million, so he has probably learnt his lessons in the last 5 years. His story might be a good lesson in narcissist spending habits and money management.