At one point or the other, we all have gone through a crash diet, maybe not all of us!, but some of us have, either to get to that ideal weight or to become healthier. We go through a crash diet because we want to get there sooner or don’t want to go through the hard (right!) way of exercising. Without thinking of the consequences we jump into the crash diet fad just because it is easy and has immediate results. Similarly, there is a Financial Crash Diet; you would wonder what diet has to do with finance?  

What is a Crash Diet?

In a crash diet you deprive yourself of food that you believe is unhealthy and the cause of your problems and move to what is believed to be a healthier option. In the same way, in a financial crash diet, you deprive yourself of spending money on what you think is unnecessary and save as much as you can. This, you expect, will help you reach your goal of financial security and amass wealth. Just like how you go meagre on your food intake, you go meagre on your money spending. But is either of it sustainable over a long period of time?  You may find this working for a short time but end up where you were before. Let’s discuss whether Financial Crash Diet is a good thing or not?

• • Is it sustainable? – Depriving yourself from spending and being thrifty may appear to be working initially, but after sometime, you start wondering, what is the point of saving, if you are not enjoying and using any of it? How do you know that you have saved enough to lead a normal life? Who has seen tomorrow and how is it going to be? So instead, create a more realistic and sustainable plan that you can carry on regularly and would benefit your financial health in the long run.
  • Standard of Living – The lifestyle that you are leading by being thrifty has you making many sacrifices, which you believe are essential, when compared to leading a regular lifestyle. This creates a false impression of what your future lifestyle would be. You wouldn’t want to be living a life with only bare minimum requirements met and putting away the rest of the money. It is better to set up a lifestyle that is consistent, meaningful and a way of life rather than a temporary fad. 
  • Increase in expenses – As life happens, getting married and having children, it will become harder to lead a thrifty life. You cannot expect your family to lead the same kind of life. There will be a surge in the expenses as your family expands and you have to make some changes. It would be fine to lead a thrifty lifestyle when you are younger and in your initial days of earning. This will help you to save for your next phase of life and you can change your lifestyle and not be worried.  

• • Increase your income – There is only so much you can save from your salary. Unless you increase your income, you cannot increase the contribution to your savings. Instead of thinking of ways to save, you can divert that energy on thinking of different avenues to earn additional income.

You get what you pay – When you go shopping, it is a good thing to look at what is on discount and compare products and buy something that is cheaper than the other. Though you should remember that you will get what you are paying for. The quality of a product is directly related to the cost. A cheaper product may save you money today but you may end up buying more often than you like as the product may not last long. It’s better to spend a little more and buy a quality product that will last longer and probably provide more comfort, which would be a smarter use of money.