Before buying that luxury car or the swanky smartphone which has just been launched in the market, just ask yourself: Do you really need that car or phone, or are going to buy just because your neighbor or friend has got that the other day? The fact is, even the smartest of people do stupid things with their Money and usually have budget leaks — whether it’s careless spending or tiny indulgences that add up over time. And while they keep worrying about where their money actually goes, these spending holes drain their hard-earned money without them ever noticing it.

You must be aware that money saved is money earned. Therefore, stop giving in to instant gratifications like eating out tonight, buying that new costly phone, and going out on impromptu trips etc on a long weekend. “It may be fashionable to say ‘I live to travel’ or ‘If I don’t do this, what’s the point of living’ to justify any unnecessary expense. Ask yourself one question before spending any money — is this really required? If the answer is not an immediate yes, you can avoid it. Do not succumb to modern peer pressure. Just because your close friends, family or acquaintances are doing something, it does not mean you too have to spend on the same,” says Anil Rego, Founder and CEO, Right Horizons.

Another way to avoid wasting money is to make a simple budget at the start of every month (before salary or monthly income comes in). List out all the must-do expenses you will incur. As the month progresses, tick off the expenses one by one. If you stick to the list, you will save some money. This money when invested properly can lead to the creation of wealth. When you save a little bit money, control the urge to spend it. Instead, spend a small portion (5-10%) of it to reward your discipline. Stop associating your happiness with spending; instead, link happiness with saving. If you cannot stop spending, try to save as much as you spend. This can also help.

Saving money is 50% of what rich people do. The rest 50% is investing in avenues where you will get good returns that beat inflation. “Did you know that if you save and invest the monthly Netflix charge of Rs 800 per month for thirty years in an investment instrument that yields 15 percent annually, you can accumulate Rs 55 lakh? That is the power of investing smartly. If you are below 30, invest a bulk of your savings in equity/stock-linked products. Debt should only be a small portion of your savings. Through mutual funds, you can spread your savings across a variety of funds. Take 5% exposure to gold. Do not invest in real estate with a 5 to 10-year term; there are better options,” says Rego.