These are the tips I follow to save money and inculcate financial discipline:
Buy to solve a specific problem: If you can’t identify how a purchase will solve a problem in your life or help you, don’t buy. Especially don’t indulge in retail therapy, where you buy to make you feel better. You’ll find that your underlying problem is still there.
First principles: Spend on what gives you happiness, regardless of what is accepted as the norm. For example, most people sleep on a bed, but I place my mattress on the floor. Why Because a bed doesn't add any additional value to me, so why waste money on it? It only makes the room look small. Just because everyone is doing it doesn't make it right. Think from first principles.
Don’t buy based on the past: Don't use what you did in the past as a point of reference, because this will cause expenses to increase every time you buy something, going out of control. For example, I always used to buy the flagship iPhone, but this time I bought the iPhone 15, not the Pro. This was because the 15 had everything I wanted. Don’t make it a habit to “buy the best iPhone”.
Don’t compete: In modern society, we compete with others by buying fancy products. The problem is that others are raising the bar all the time, so you have to spend even more, impoverishing yourself in the process, all for someone else. Are you so vulnerable to what strangers think that you’re going to spend a ton of money for them? Spend for yourself, not for others.
Take pride in frugality: Till recently, I used to use an iPhone 11, and most people I met had a more recent iPhone than me. Instead of being embarrassed, take pride that you saved a lot of money for more meaningful endeavors. On another occasion, I went to a high-end restaurant with a crumpled bag on my shoulder, while others had fancy bags. One person pointed it out to me that my bag is not good enough. I didn’t say anything, but I reminded myself to give zero weight to facile poseurs, and that they’re fools for spending hundreds on a pretentious bag when a cheap supermarket bag will achieve the purpose of carrying items just as well.
Do anti-marketing: Companies make you feel that unless you spend ₹4000 on a belt, you haven't really 'arrived'. You’re not really successful. Maybe successful to an extent, but not completely successful. Counter that with anti-marketing. I was with a friend at a place that charged ₹4000 for a belt, and I said "4000 for a belt!!! That's too costly. Do you have anything cheaper?" so loudly that the entire store heard me, and the other shoppers turned to look at me and my friend, who was embarrassed. The salesman gave me another belt for ₹3000 and I announced, "3000 is too much. What's the cheapest belt you have?" My friend said, "Kartick, what are you doing? Sssh!!!" The other shoppers turned to look at me with disapproval. I looked back at them sneeringly, thinking, "You fools, you're overspending and you think you're smart for that? You're actually sheep!" Just as companies market to you to manipulate you into buying unnecessary things, do your own anti-marketing in your own favor.
Don't buy a "better" product if it's not better for you. I bought the iPhone 15, because the 15 Pro isn't better. The 15 Pro did have some benefits, but so did the 15 over the Pro. Taking all this into account, I don't consider the Pro to be worth more. The MRP is merely the seller's opinion of what it's worth. Have your own opinion of what it's worth. This is similar to active investing, where every investor has their own opinion of what a share is worth, and they buy only if the share is worth less than their opinion.
Use money to eliminate annoyances: Can money buy happiness? Yes, if it's used to eliminate the small annoyances in life, like taking an Uber to avoid walking in the sun. As another example, I upgraded my iPhone when the old one became unresponsive — when I’d swipe, nothing happened, so I thought I didn’t swipe properly, but then it reacted. On another occasion, I had to wait for the keyboard to appear. When we’re productive, we need tools that can keep up with us. What we’re productive with is different from person to person. A chef may find my knives to be unacceptably slow, but they’re fine for me, so I won’t waste money on better ones. So find out what’s important to you, and spend there.
Don't spend on brands. If I peeled the logo off your car or laptop or dress and stuck another logo, while maintaining the same benefits and quality, would you still buy it for the same price? If not, you're spending on the brand.
Ignore discounts: Don't buy because there's a discount. If a ₹300 product is discounted to ₹200, don't think, "I'm saving ₹100!" Think, "I'm wasting ₹200!" Anyway, the product is probably worth only ₹150.
Stay away from manipulation: Don't go to malls except to buy something. Use an ad-blocker. Don't listen to the radio or watch TV, since most of it is ads.
Don’t buy in advance: If you need something, but not yet, wait. The price may reduce by the time you buy it. Or the need may go away. Or you might find some other way to address the need that doesn’t require the purchase. Buy only after it hurts, not in anticipation of preventing the hurt.
Think long-term: if you buy a ₹10 lakh car instead of a ₹20 lakh one, can you retire earlier, or have more financial freedom?
Don’t try to future-proof purchases: When I tried to, I wasted huge amounts of money on things that I turned out not to use at all. Buy based on today’s needs.
Buy for your level of skill: Don’t buy costly tools that require a lot of expertise to use if you’re not that skilled. For example, in buying the iPhone 15 over the Pro, I considered that the Pro has Academy Colour Encoding System, but I’m not going to submitting my movie for an Oscar this year.
Buy on benefits first, cost second: My algorithm for purchases is to first identify the best product for me without taking cost into consideration. This step resulted in two options: the 15 and the Pro. Each has some benefits over the others. I couldn’t unambiguously say one is better for me. In such situations, I bring in cost as a factor to break the tie. I do this two-step process because considering cost from the outset will muddy the comparison: Determining whether a product X is better than Y for you is hard enough without bringing a third factor “… for a price difference of Z”. Our minds are limited, and considering too many factors at once leads to wrong conclusions or being stuck. A lot of good decision-making is just knowing what factors not to consider, or not yet.
Don’t pay surcharges: I don’t accept “3 months free” offers that charge my card afterward without my further approval — these offers are given to manipulate you, not to help you. Don’t buy things on EMI. I moved back from IMPS to NEFT because both my banks charge for the former but not the latter. Invest in a direct mutual fund, not regular. Buy third-party insurance for your car, which is the minimum required legally. It won’t compensate you for damage to or loss of your car. Handle those out of pocket. If you can’t afford to buy another car if yours is totalled, that means you lived beyond your means. Insurance has a negative expected value — the insurance company charges you more than the amount they’ll pay out multiplied by the probability of the payout. This is the only way they can cover costs and make a profit. But their profit is your loss. So self-insure. The only kinds of insurance justifiable are those you can’t afford to handle: life insurance, medical insurance, and home insurance.
Nice. I was always rebuked as being misely for these same habits. Have never been a sheep. Glad to know I am not alone.