Importance of money saving tips
Gone are the days when basic needs of life were- Food, Shelter, and Clothes. As of now in today’s era, money undoubtedly is the most important commodity. A simple conversation with anyone, these days, begins with similar questions revolving around money -“What work do you do? How much do you earn? What is your take home salary or your gross package?” Hence effective money saving tips is the most searched thing on search engines.
We work relentlessly in order to thrive. The dilemma of every employed individual is genuine – how to do money saving efficiently or what are some efficient money saving tips? “A penny saved is a penny earned” is the only financial advice what our forefathers have persistently taught us and themselves followed. But in our technologically-advanced era, the prices of each and everything is skyrocketing. Also, under the current levels of inflation, that “penny” is just not worth anything. We, the generation fondly known as iGen or Gen Alpha, need to know much more about the concept of spending and saving. Before we get down to actual money-saving methods, let’s know why is the need to save at all? Why is “money saving” so essential?
Benefits of Money Saving Tips-
♦ Financial Security
The main reason is definitely the financial security. A lump sum money saved for anything – ranging from wants to necessities, from wealth increment to marriage is needed at every step of life.
♦ Emergency Cushion
One definitely needs a back-up- an emergency cushion, if the need arises in case of a crisis or bad times. We cannot predict our future, so one certainly needs an extra fund. Well, it is one of the most common money saving tips followed by women in every household.
♦ Standard of Living
With the ever climbing rate of inflation, the expenses to have a decent living standard are high too. It not only provides support but also a sense of assurance and peace of mind to have an amount to fall back on.
Now that we know the benefits, let’s get started on how to actually apply some money saving tips and ideas. Saving money isn’t hard or impossible, it isn’t even easy or simple. It’s a play of various tricks. Once you are in the groove of building your nest egg, then it’s easy. The biggest mistake that we do is thinking of saving after all the spending and splurging. The prevalent question here is to “How to save money from salary?” Well, the basic prerequisite is to start budgeting with your net pay (take-home salary) after all the deductions, rather than making the mistake of taking your gross income in account.
The golden rule is- “50-30-20 …. 50% on Need, 30% on Wants and 20% in Savings.”
Need- Rent, Fees, Grocery, Bills, Fuel etc.
Wants- Shopping, Entertainment, Eating out, Trips Luxury Items etc.
Savings – All payments towards SIP, Mutual Funds, Insurance etc.
Before you start the process of saving, you need to ask yourselves a few questions.
- Is there any extra money with you that you can save in fixed time intervals? Say money for a policy (SIP- Systematic Investment Plans or RD- recurring Deposit) every month.
- Are there any habits that you can curb and save the money and apply towards your savings target?
- Are you saving to invest in some long-term (Retirement, Education) or short-term (Buy something, Travel) target?
Essential Money Saving Tips
In the yesteryears, our parents had the habit to keep money around various drawers or boxes in the house. For them, that was their well-organized money saving trick. But nowadays, it isn’t safe to have that kind of cash lying around in one’s house. We now have the luxury of credit/debit cards and money management applications on our phones. Other than that, a few small tips that will ensure that you reach your Savings Target-
- Keep an emergency backing for any last moment needs like a health issue or impromptu travel.
- Do not save what is left after spending. But spend what is left after saving.
- All of your loans and EMIs combined, shouldn’t exceed any more 45-50% of your net income. To ensure a smooth sail, ideally, home loan payment should be within 35% of your take home money.
- Keep a check on your inflow and outflow of cash.
- Save any extra unexpected windfall income. E.g. rent, income tax refund, Fixed Deposits maturity money etc.
- Start budgeting and write down each and every expense, no matter- big or small. Keep in mind that you need to be – “Beware of small little expenses; a small leak will sink a great ship.” You can use some money management apps available these days. No matter how much tight budget you may be on, a piece of your earnings can be saved. The key is to be consistent and disciplined.
- Keep a check on your credit card bills. Try and clear your outstanding dues on time, so as to avoid any debt or extra interest charge.
- Assign a budget under headings like- Bills, Groceries, Fees, Extra etc. And try to stick to your budget. Keep an upper-limit for all the headings and try not to go overboard.
- There are a lot of money investing options available. Right from property to gold to policies. Survey the market closely and choose your method of money building wisely -with low-risks and maximum returns.
- Have a “buy-nothing days or week or month” as you can manage. It’ll definitely help you to curb your buying or shopping habits and control your impulses.
- Try and purchase all necessary things, and luxury items at the end of the month, only if you have extra funds left after the designated savings.
- Keep a lookout for sale and start using coupons. Compare the offers and costs of major items before buying. Be diligent before any big spend. It is one of the common money saving tips among the new generation.
- How great it feels to find a crumpled Rs. 2000 note in one of your old bags?! Use piggy banks for loose change lying in your purses or around the house. Believe it, at times you may hit a jackpot.
How to save money each month?
Like I said earlier, the key to saving is to be consistent. Automate your savings. Direct a specific amount from your bank to your choice of plan, be it RD, SIP or Mutual Funds. Whatever be your situation – be it tight budget or easy money month that pre-decided fixed amount will be automatically diverted to your savings building plan. Easy!
How to save money for kids?
Kids, now more than ever, need to know the value of money and also learn to appreciate it. The easiest way for a child to realise monetary importance is when you let them handle it. Give them a fixed pocket money every month. Let them decide whether to spend or save. As small as a chocolate to as big as a toy, let them decide. Not only will they learn the importance of money but also learn to take care of the things they buy themselves. Moreover, you can give them piggy bank or money jars to save.
As parents or caretakers, invest in child plans like Sukanya Samriddhi Yojna and LICs or open a child savings account, and put in some money every month to ensure decent funds available for your child’s future. “One of the greatest gifts we can give children is to prepare them to be responsible empowered adults around money.”
Creative tips to save money
Few of these tips might feel over the top, but if are on a tight budget and very serious about savings, then try these creative ways to save money-
- Zero wastage especially food items – This concept is pocket-friendly as well as environment-friendly.
- Declutter – Sell all your extra unnecessary stuff online or have a garden sale.
- Reduce your credit card interest rates and never use credit cards that have fees.
- Set realistic goals.
- Try and commit to reducing your spending a little every month, even if it’s just Rs 500.
- Don’t over-indulge. Restrict your eat outs, order-ins, and movies.
- Shop for things when they are on a sale or out of season.
- Compare things at various outlets and then take an informed decision.
- Make homemade gifts to not only save money but have a personalized feeling too.
- Think twice before buying anything, especially, impulsive shopping online.
- Whenever emotional, don’t shop. We buy gratuitous items when we are depressed.
- Try and inculcate habits that aren’t too expensive to keep. Connect back to yourself – go on hikes, treks, cook for yourself.
- Don’t spend without thinking just because you feel you deserve it. You might be able to afford that now, make a plan and then spend. Deserving and be able to afford are two very different entities. Sometimes the hardest thing about saving money is just getting started and knowing the right money saving tips. Start saving today!
“Money doesn’t grow on trees, money isn’t cheap or free.
It’s an obsession, an addiction, for all- a child to retiree.
Think of it as a reassurance and life’s insure,
Plan ahead to live a rewarding life: the key to an unlimited treasure.”
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