We typically spend most of our income, and then regret our spending decisions, especially when we need money to achieve our life goals! In this article, we discuss why you should set-up systematic investment plans (SIPs) to strike a balance between your spending and savings decisions. We also show you how to create SIPs to help you achieve your life goals.
Why set-up SIPs?
You and I suffer from what behavioural psychologists call “present bias”. This refers to our marked preference to enjoy life today at the expense of suffering the consequences in the future. Why is that so?
An important reason is delayed feedback. If you eat tasty-but-unhealthy food today, you enjoy the experience momentarily. But what if you eat healthy-but-not-so-tasty food instead? You do not reap the benefits till you are old. Likewise, spending today brings you happiness now. Saving for the future only gives you happiness in the future. Now, current happiness is much better than future happiness. So, spending today feels much better than saving for the future!
