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Flexible Payment Planning

A 4-Step Plan to Help You Spend Less and Save More

by Rachna Bijlani, CFP®

January 2, 2020


I was around twelve and my brother was ten years old, when my dad started giving both of us money in lieu of presents on every birthday, festival or any other special occasion. We were given the choice of either buying whatever we wanted for ourselves with that money or he would help us invest it, usually in a postal savings certificate (called “Indra Vikas Patra” in India), which was similar to a zero-coupon bond. My brother would invariably choose to spend all his money while I got a kick out of saving and investing it. Seeing my money grow always brought me more joy than buying frivolous stuff. The depreciating assets that you possess or the salary that you earn are not true indicators of how wealthy you are; being wealthy means being financially independent. Financial Independence is the status of not having to depend on a paycheck or on other people to pay one's living expenses for the rest of one's life.

We start every year with good intentions, strong resolutions, hope, and positivity. Unfortunately, this euphoria surrounding new beginnings loses its fizz in a few days and we fall back to our old, comfortable ways. Laziness and muscle memory take over good intentions which ultimately leaves us with regret and remorse. If spending less and saving more is one of your resolutions for 2020, here’s my four-step plan to help you stick to your resolution:

Step 1- Analyze the problem

We start by analyzing the reasons why we end up spending more and saving less than we intend. This is the most difficult but the most important step in the process. This requires you to be completely honest with yourself. Remember that you are not answerable to anyone and that you are only going through this process because you chose to do so. Keeping that in mind, note down the reasons why you think you’re unable to save more. Here are some common reasons why we end up spending more than we’d like to:

  • I shop online when I’m bored.

  • I eat out every night because I am too tired to cook at the end of the day.

  • I have a reputation to live up to.

  • I want to give my children everything that I didn’t have growing up.

  • Numbers intimidate me so I don’t track my expenses.

  • I am going through a lot of stress in life and retail therapy certainly helps.

  • I am only trying to keep up with my friends and neighbors because I live in a good neighborhood.

  • Spending money on luxuries gives me a sense of accomplishment.

  • I’ve wanted to own a Lamborghini (or anything else) since I was a child.

  • I am worth it.

  • You only live once.

Once you have figured out your personal reasons for over spending, go through your list and examine each reason more closely. Think about how you feel each time you’ve succumbed to the above triggers or emotions. Keeping that in mind, let’s move on to Step 2 in our process.

Step 2- Determine Your Priorities

The next step is to write down your financial goals and priorities. Think deeply about what’s actually important to you in life, in the present time as well as in the future. Here are some common financial goals and priorities:

  • To make my savings last through my retirement.

  • To be able to pay for my children’s college education.

  • To not have to work in a job that doesn’t bring me joy.

  • To travel the world.

  • To make sure that my family is taken care of if I were no longer around to support them.

  • To be able to afford medical insurance and pay my medical bills when I can no longer work.

  • To leave a legacy for my children.

  • To support my aging parents.

  • To help those in need and make a difference in the world.

  • To live and die with dignity and self-respect.


Your list could be similar to the one above or it could be totally different. You have to figure out for yourself what really matters to you in the grand scheme of things. Next, compare this list to your first list from Step 1. Go through each item on both lists very carefully and determine what’s most important to you. Keep in mind that choosing List 2 over List 1 won’t be an easy task. You are opting to give up short-term comfort and instant gratification for long term security, which currently, is intangible. You are choosing your family’s future over keeping up with your friends and neighbors. Be prepared to combat emotions and discomfort as you tread your way towards financial security and independence. After you’ve resolved to proceed with your choice to spend less and save more, the next step is to have a concrete plan-of-action.

Step 3- Create a Plan of Action

This is the most technical step in the process. You can either do this by yourself or you can work with a Financial Advisor who will help you devise a plan to achieve your financial goals. This plan should be like a roadmap which connects your current financial situation to the financial goals that you as aspire to achieve. This plan needs to specific to your financial goals and it should be practical enough for you to follow through. Although I strongly urge you to seek professional advice, here are some generic suggestions:

  • Estimate the cost of your goals, for example, paying for your child’s college education or your retirement, adjusted for inflation.

  • Draw up an investment plan based on your financial goals, risk tolerance, time horizons, and liquidity needs. Estimate an expected rate of return on your investments based on your investment plan.

  • Based on the above steps and the time horizon of your goals, compute the amount that you need to save on a regular basis to achieve your goals.  

  • Track your current income and expenses diligently and separate your discretionary and non-discretionary expenses. Try to keep your non-discretionary expenses as low as possible.

  • Set up an automatic saving plan such as auto deduction from your pay check to contribute to your 401K.

  • Minimize the use of debt, especially high interest debt.


Step 4- Hold yourself accountable

The best laid plans are totally worthless unless we follow them through. Approach this process of saving like a business plan. Set specific goals and timeframes, have a solid plan of action, and devise a way to track your progress. Check your net worth and investment returns at least once a year and compare these to the targets that you’ve set for yourself. Make changes in your plan, if needed. Remind yourself again about what’s most important to you. Motivate yourself by visualizing how achieving your goals will make you feel. Don’t be too hard on yourself if you falter once in a while, because life is not a sprint, it’s a marathon. Pick yourself up and march through, while maintaining focus on your goals.

Finally, I’d like to leave you with these beautiful words from the Greek philosopher Epictetus: “First tell yourself what you want to be, then do what you need to do.” This is the only quote that I have ever needed for inspiration, hope it helps!

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