Everyone agrees that “it is not how much money you make, but how much money you save” that is important. Changing your spending patterns and decreasing costs wherever feasible makes it much simpler to save money each month. You may believe that minor expenditures do not add up, but it is astounding how much you wind up expending in the long term on these small purchases. For example, if you spend Rs. 20 on coffee every day, it adds up to Rs. 7300 every year.
Saving money is a necessary effort in order to realize your ambitions. While some people are endowed with a decent enough monthly salary to fulfil their costs and goals, many people have to limit their desires after hardly managing their monthly bills. The monthly saving chore may appear modest at first, but you will recognize its importance in the long term.
How much money to save each month and where to put it:
The amount of money you need to save each month is determined by your ability and financial situation. At a minimum, most people advocate saving 10 percent of your salary each month. Some financial experts propose saving 15% or 20% of your salary as a desirable aim. However, no one will object if you save as much as possible.
To save money each month, you must first locate the funds in your budget to do so. Hence, having a budget is usually advised. Without a budget, your savings objectives will be consumed by your costs and will never be seen. After you’ve set a budget and begun tracking costs, you’ll need a savings strategy and should keep your savings undisturbed for at least a year.
Once you’ve established a savings method, divide your annual goal into months. By focusing on monthly savings objectives and developing a savings snowball, you may see your money rise gradually but steadily over time.
Saving Tips:
There are several simple strategies to conserve money and add some more cash to your budget. Here are some money-saving suggestions to help you alter your spending habits and go on the high growth trajectory to financial independence.
1. Cut down on your grocery budget:
Most individuals are surprised to see how much they splurge at the grocery shop each month after creating a budget. It’s so simple to wander around the supermarket aisles, picking items that aren’t on your shopping list or that you didn’t want to buy. Those small expenditures pile up quickly and end up breaking the budget each month.
You may save money on your groceries by scheduling your meals each week and checking what you already possess in your kitchen before you go shopping. And, if you really want to keep to your grocery list, go to your local store rather than a supermarket.
2. Payoff your debt faster:
When it comes to preserving money, monthly loan payments are the largest drain. Debt deprives you of your money, thus it’s best to get out of debt as quickly as possible in your life. There are several methods for debt repayment. One option is the debt snowball technique, in which you pay off your loans in ascending order from smallest to largest. The other way is the debt avalanche strategy, in which you can choose to repay debts with higher interest rates first in order to save money from incurring higher interest rates every month. You should not be concerned if you do not fully comprehend these debt repayment techniques. Just remember that the key point here is to focus on reducing your debt as quickly as possible so that once your money is freed up, you can finally utilize it to make real progress toward your savings objectives.
3. Automate your savings each month:
It’s all too easy to find reasons not to save, and one of the most common is that we simply “forget” to put money into our savings accounts. As a result, automating your savings is a simple approach to save money every month. Set up an automated deposit of a particular amount into your savings account once a month. And you must do this during the first few days of your pay day or salary day.
Keep the money that is automatically saved in a separate savings account or maybe something similar. You will not spend money if you don’t see it. And before you know it, you’ll have a substantial sum of money saved away.
4. Spend that extra income wisely:
Put that nice work bonus, inheritance cash, gift money or any tax refund to good use. ‘Good use’ of this money includes paying off debt quickly, such as education loans or credit card bills, rather than putting it in a savings account, where the return is significantly less than the interest rates on these loans. If you’re debt-free, put those additional rupees toward an emergency fund, which is absolutely necessary for any future crises.
5. Learn to say “No”:
We live in an age of immediate pleasure. Food from your favourite restaurants is just a click away and will arrive at your house in a matter of few minutes. The clothing or other things that you wish to purchase are only a few clicks away from being delivered to your door within a day or two, or even within the next few hours. We’re only a few mouse clicks away from fulfilling almost any ambition. However, you will save a tonne of money if you can delay some satisfaction by exercising the power of “No” or at the very least, “Not Now”. It takes a significant mindset change to develop healthier spending habits in general.
6. Refinance your mortgage:
This hack will save you money in the long run. If you have a 30-year or 25-year mortgage, you’re paying a lot of interest throughout the life of the loan. In the long term, refinancing to a 15-year mortgage will save you thousands of rupees in interest payments. You can contact your bank and request a refinancing of your current mortgage. But before doing this, you also need to keep in your mind that if you are having that much of an extra income month-on-month to pay for these increased EMIs. So, before you go out to refinance your home loan, do your math to see whether it’s worth it for you.
7. Explore a spending freeze month:
Don’t buy anything unnecessary for a week, or perhaps a month. Consider it a challenge, or even a family challenge in which you can include your spouse. Make your purchasing restriction work by preparing meals with what you already have, avoiding shops where you prefer to impulsively purchase (this might include certain online ecommerce platforms as well), and saying no to anything that isn’t a vital requirement. You aren’t becoming a spendthrift or restricting yourself by engaging in this hobby. Instead, you’re attempting to figure out where your money goes inadvertently each month, or at least in a certain month.
8. Eat at home:
Indians dine out mainly because they want to explore, love eating, or want to spend their spare time doing so. According to a Nielsen report, urban Indians expend around Rs. 6,500 per year on dining out and this is increasing year-on-year. Millennial aged 18 to 34 years who make more than 10 lakh rupees per year spend 13% of their food budget on eating out. Purchasing lunch a few times each week may appear reasonable, particularly if your beloved restaurant is within walking distance of your office. However, simply bringing your lunch from home might save you a lot of money. This allows you to see your money grow month after month. Not only that, but you can sometimes get a week’s worth of groceries for the same amount as two lunches out at a restaurant.
9. Make a Shopping list:
We have previously covered in one of our earlier blogs that a study confirms the reality – “you shouldn’t go shopping when you’re hungry”. The same is true for shopping without a list since it is far too simple to purchase on urge when you don’t have a plan to follow, which can lead to overspending. Making a grocery list may have a significant influence on how much money you save each month.
Try online grocery shopping, which is available at most major supermarkets these days and may save you a lot of money. In other words, you’re compelled to stick to your plan and prevent impulse purchases.
10. Try to use a spending diary:
If you have no idea where the entirety of your hard-earned money is going, try keeping a spending diary to monitor your spending patterns and learn where your funds are going. A spending diary is simply a record of every single expense you make on a daily basis over a set period of time (For example, over a 30 day period). Because you will be recording every transaction, you will be able to identify where and why you are expending your money and cut back on unnecessary expenditure. This will entail additional money saved each month. This will also assist you in identifying areas for development so that you may perform better.
We don’t need to hunt for any web tools or formula-built excel sheets to keep track of our expenditures. It is strongly advised to begin with a pen and notebook that you have with you at all times.
11. Use cash to pay:
It may amaze you, but purchasing with cash can really help you save money. When you give over cash, the ‘pain of spending’ is more intense than when you use a debit or credit card or other digital payment methods. So much so that some people have opted to manage their budget using the cash envelope approach in order to save even more money. Never ignore the bargaining power of cash.
Conclusion:
If you wait for the “perfect moment” to start saving, it will never come. The ideal time to begin saving is now. We must begin saving with a winning mentality each month. Whatever occurred last month or how much you saved last month, the past is gone. It’s a new month, so can start using the money-saving strategies and techniques outlined above to gain control of your finances. It all starts with tiny changes, altering habits, and setting objectives.
Have a clear objective that you check on a regular basis to keep you motivated to save. Evaluate your progress on a regular basis and modify it as needed.
