Do not save what is left after spending; instead spend what is left after saving’
— Warren Buffet
While it is an exceptional advice from the “Oracle of Omaha” and something that everyone must do, this article takes it beyond the much-talked-about “saving before spending” principle and forays into the new age idea of “saving while spending.”
These are the savings that one can accumulate throughout the month and are, of course, over what one has already set aside at the beginning of the month as advised by Buffet. We are talking about the art of using deals, discounts, cashbacks and other offers to save some extra bucks every month.
From groceries to movie tickets, phone and utility bills to spending on fuel and eating out: there are discount and cashback deals available for almost every purchase one makes throughout the month. Then there are several rewarding credit card programs and online payment apps that reward every other transaction with some cashback to the wallet, or sometimes even directly into the user’s bank account.
Now it is all about how well one can manage their expenses in a way that takes the most advantage of such offers without letting impulse buying get in the way.
Of course the big question is if it is all worth it and if one can actually save a significant amount by using such offers? Or would one end up spending more than they actually save, as it often happens with big discount sales at the shopping malls?
Dr Swati Mantri, Assistant Professor of Sociology, Sharda University, frequently avails such offers stated, one can save a good amount of money as long as they manage their expenses smartly. She feels “saving money while spending” allows her to save something extra every month.
“I buy my groceries on the BigBasket app, which offers products at quite a discount. Then I use my Citi Bank credit card for the payment, which fetches me another 20 per cent cashback straight to the card, which is over and above the app discounts,” she said.
Using all these offers from apps like Zomato, BookMyShow and the likes, one can easily save at least 10-15 per cent of their monthly expenses, which is no small amount. The only thing one needs to keep in mind is that they should use such offers for only those expenses that they make anyway.
However, Narasimha Kumar, CEO, Akshaya Money Management, negates such attitude despite cashbacks and discounts saving some extra money because, “Sellers give ‘cashbacks’ or ‘discounts’ to onboard new customers and encourage repeat purchases. In a typical cashback, the seller returns a part of the value to the consumer. However, in the long term, this is more beneficial to the seller than the consumer.”
He further explained, many apps and retailers announce 100 per cent cashback schemes and a customer may go overboard while shopping. “But in order to redeem such offers, often customers need to make a future purchase from the same seller. To make the deal efficient the customer has to inevitably shop again, since they have already paid a part of the cost.”
However, Kumar admitted that through a careful and smart planning of expenses, one can actually save some money. “First of all, it is important to make a list of things that you really need. When offers throw up, customers can see what items on their list are on sale or available in cashback offers and then buy them as opposed to buying things that are on offer but not actually needed.
Also, since cashbacks and offers are regular and in many brands, it is better to choose a particular time of the year or month when you want to avail these. This leads to disciplined purchases and savings. For example deals on groceries and food every month,” he added.
Surender Pal, Head of Retail, Kalpataru, said the discount and cashback culture is becoming inherent to the Indian retail sector and the perceived savings have a psychological impact on buyers and encourage them to opt for aspirational purchases. “There is definitely money saved by the consumer. Whether this money is used to buy more or goes into the individual’s savings depends on their financial status. Most consumers have an amount set aside as per budget for various purchases, what is saved due to cashback is most likely to be used to buy more. You have cashback on grocery purchases, movie tickets, fuel, and use of select bank cards, which save money,” he further said. Pal added that to make the most of these offers, one needs to first analyse how much they usually spend on various items in a month and then they can buy the same goods during the discount period.
Ankit Rastogi, Vice President Accomodation and Activities, Cleartrip, warns against such offers as they are changing consumer behavior and giving rise to several alarming trends including a drastic increase in impulse shopping.
He added that there needs to be a healthier balance between online and offline shopping. “Offline shopping might be slightly costlier than online shopping, but it is not as vulnerable to impulsiveness. Online is more convenient and makes certain products more affordable, but practices such as deep discounting lead to consumers devoting a lot of time and effort in hunting for the best deal,” Rastogi said.
He added that impulsive online purchases also make people less inclined to follow the four principles of sustainability —refuse, reduce, recycle, and reuse,which has a direct impact on our environment.
So is it really possible to save while spending? Today’s retail market offers ample opportunities for a smart and a disciplined buyer to do that, but for those who are easily lured by deals and discounts, setting aside money at the beginning of every month, or even resorting to the tried and tested SIP plans, would be the best way to achieve it.