While the convenience that the digital economy has brought into our lives is amazing, there are many instances where digital spending has led to a rise in our spends. Managing day-to-day expenses has become increasingly challenging with the advent of technology – such an ironic statement isn’t it. Remember when our mothers meticulously maintained a diary in which they would make note of all the household expenses. Buying groceries was a monthly, or at the very least, weekly affair.
Even when we first started managing our own households, there would be one trip to a big box store in the mall in the week. Going to the mall was an event in itself. Even till a few years ago, if something needed to be bought, you either planned it in advance so that it could be part of the mall trip, order in advance from one of the e-commerce websites, or if it’s last-minute, make a special trip on the way back from work. Since we planned it, it meant we stopped to give it a thought.
The continuing rise of quick commerce—with its one-click purchases, seamless payment systems, and instant availability—has fundamentally changed our relationship with money. While the younger generation seems to have adapted to this seamlessly, us mid-lifers, who’ve made quite the journey from local markets to malls, to online marketplaces, to now quick commerce, continue to grapple.
Ever wondered how to navigate this age of digital spending and come out unscathed? Here’s a guide.
Some common digital spending traps
1. Subscription creep
Small monthly fees can add up over time, often going unnoticed until they become a significant expense. Regularly review your subscriptions to ensure they remain necessary.
2. Algorithmic recommendations for digital spending
Personalized suggestions can create artificial needs, leading to unnecessary purchases. Be mindful of these recommendations and assess whether they align with your actual needs.
3. Limited time offers
These create false scarcity and urgency, prompting impulse buys. Take a moment to consider whether the offer is truly beneficial before making a purchase.
4. Frictionless checkout
The absence of a psychological pause during checkout can lead to more frequent purchases. Implementing a brief waiting period before confirming orders can help mitigate this.
5. Buy now, pay later
Services that disconnect current consumption from immediate payment can lead to overspending. Use these services judiciously and ensure you can afford the payments.
Ways to create comprehensive budgeting strategies
Now that we know what the pain points are, here’s a look at ways in which you can create comprehensive budgeting strategies:
Financial Foundation
- Create a clear financial blueprint by defining your long-term goals and priorities before focusing on day-to-day digital spending.
- Making a clear distinguish between needs and wants by regularly reassessing what constitutes a necessity versus a luxury
- Establishing an emergency fund with about 3-6 months of expenses saved , which in turn reduces the need for panic purchases or credit reliance
Digital Spending Tools and Techniques
- Use apps that categorize spending and provide real-time insights.
- Consider maintaining separate accounts for different spending categories
- Create a notification system for all purchases above a certain threshold
Psychological Approaches
- Implement a 24-hour rule for all non-essential purchases over a certain amount.
- Practice mindful consumption and ask yourself “why am I buying this?” before completing purchases.
- Indulge in regular digital detoxes by taking breaks from shopping apps and websites.
Subscription Management
- Conduct a quarterly subscription audit where you review all recurring payments and evaluate their value
- Calendar all trial periods and set reminders for when free trials convert to paid subscriptions
- Consider subscription rotation in which instead of maintaining multiple entertainment subscriptions simultaneously, rotate through them annually.
The key is developing habits that allow you to enjoy these benefits while maintaining financial discipline. This means being deliberate about which conveniences you embrace and which you choose to forgo in service of your broader financial goals.
