Saving money looks like a very easy job. In reality, many people fail to maintain a balance between their income and expenses.
What problems do they face? What key points should they follow to save money to meet their life goals?
Here are some simple points on how to start saving your money. Every individual, a businessman, a college student, worker, or anybody needs to understand these methods of saving money. If you find these money habits valuable, do share them with others.
1. Maintain Expense Record
The First Step for saving money is to record every penny you spend.
It’s of utmost importance to find the rights and wrongs you commit while spending money.
In this way, you will have precise data for how much you are spending on genuine needs and how much on leisure things.
Tip: There are many tools like Khatabook, Expense Manager, etc for your help.
2.Include Savings in your Budget
Once you have the data for your expenditure, you can plan out how you are going to manage it.
Budgeting gives a proper outline of cashflow measurement. In this way, you can also give proper place to your savings.
Tip: It’s better to keep at least 10% of your income into saving on a regular basis.
3. Find ways to cut your spendings
If the monthly spend is crossing your budget, try to find out what can be cut short from that.
Here are a few things which you can try:
- Almost all major sites issue festive offers or special discounts. First cross-check them. If they seem useful, use them.
- If you are planning to go out, make sure it’s not affecting your savings goal.
- There are some best-deal sites, like buyHatke, PaisaWapas, etc. which highlight top offers in an aggregated manner. Use them.
- Whenever you pay at any mall, dine out, club, restaurant, ask for any discount. Maybe you are lucky to get one.
In this way, you can save upto 5-10% of your monthly budget.
4. Set Short-Term or Long-Term Saving Goals
There are no boundaries for expenses. But always make sure that you are saving enough to manage any upcoming issue with you without any extra economic burden.
Savings Goals help in doing that. You can set your own saving goals like “I want to save 10% this month, 15% the next months, and 5 %the next, and so on.”
In this way, you can average out your savings and fully enjoy your earnings.
Short Term Goals: Decide your short-term goals(1-3 years) for which you need to save. For example, downpayment of a car, a vacation, emergency funds, etc.
Long Term Goals: Decide your long-term goals(4+ years) for which you need to save. For example, retirement, home loan, children education, etc.
5. Decide on your priorities among choices
Humans have a tendency to imitate their local environment. We get easily influenced by what is going on around us. If any of our friends are going on a trip, or planning a night out, then we get easily influenced by them.
So, at such moments, you have to be very specific about what is necessary for you and which expense can be cut short.
Tip: If you have no proper priority decisions, this might lead to additional expenses or any small or big debt over you. It’s better to decide properties.
6. Pick the right financial tool
This is the best money habit which can be discussed in great detail but I will explain it shortly. There are many tools for investment both online and offline.
You should know more about them. Try to find what is a fixed deposit? what is a mutual fund? How to invest regularly using a SIP? etc.
These questions can help you increase your financial knowledge. This knowledge will help you in saving your money for longer durations and returning about 10-15% as interest.
Tip: You don’t need just one tool. It’s better to do proper financial research. We can also help you in case you need any personal financial advisor.
7. Say Goodbye to Debt
If you have any kind of financial debt, it’s probably not a good thing. The best thing to do is to keep debt reduction your top priority.
The reason is that the debt increase exponentially, directly affecting your savings. They say it “good debt” until it’s payable.
Tip: If you have any kind of loan either a home loan, education loan, car loan, etc. make a proper structure to pay it at the earliest.
8. Make saving automatic
If you think you have difficulty saving money, you can also automate that process with your bank.
On doing that, a fixed amount of your deposits will automatically get transferred to your savings.
Tip: Almost all the banks provide an Automatic Savings Transfer facility that can help you with savings automation.
9. Cancel automatic subscription and membership
Short story: Many online entertainment providers like Netflix, Amazon Prime gives initial free/discounted subscriptions on credit cards. You subscribe to them and forget to cancel them before free time. Your money gets deducted even without your permission.
This is one of those marketing strategies which always works in the favor service provider.
Tip: Keep a check on all the subscriptions before your payment cycle is going to complete. In this way, you can save enough bucks that will be wasted anyway, without being utilized.
10. Watch your savings grow
This is that part of the process when you have tried any process for saving your money and it started accumulating slowly and steadily. The compounding effect occurs when you give time to your investments.
Review your savings every month and match them with your set goals. This helps in a periodic restructuring of your savings vs expenses ratio.
Bonus: Watch your online attention diversion
I kept this point in the last because not many people are aware of that. You watch many ads daily. On average, a person watches 4000 – 6000 ads daily.
Some look annoying but some of them capture your attention. You land on some shopping page, end up saying something to them and later find it a not worthy transaction.
So whenever you visit a landing page to buy a commodity, first find that are you really in need of that or are you being tricked into landing on that page by showing you some attractive visuals like infographics or ad-video.
If you need any kind of financial assistance, we are ready to help you with our team of experts.