Saving money is not a choice but an ethical responsibility towards oneself. You might not have any need for it in younger years. But it is a necessary requirement for the future, and it is something without which you cannot live in this world today. Savings will be a money shield for you and your family. In this article, let us try to understand why saving your money is important and how to save money in India correctly. These money saving tips will help beginners in the best possible way.
Top 10 Money Saving Tips
Given that saving money is crucial, you also have to know how to do so in the right way. Below are more than 10 ways of saving money the right way.
1. Make a budget
Maintain a list of all your sources of income and record your expenses on a daily basis diligently. Spend on what you really require, not on what you desire. After this, deduct your total expenses from your income to know how much can be saved. This will give you a clear idea about your overall financial status.
2. Make a financial plan
Once you derive the money you can save in a month, you must make a financial plan. Consider the short-term and long-term financial obligations and the cost for every aspect. Factor in inflation and calculate the necessary funds that you will require at different stages in life. Also, ensure that you extend this financial plan to include post-retirement expenses
3. Do not keep too much debt
Don't borrow more money than you can afford to pay back. Only take on significant loans, like a mortgage or education loan. Steer clear of high-interest types of loans and credit cards unless absolutely necessary. Too much debt can reduce your savings due to the additional money you spend in interest.
4. Buy genuine products
Purchase quality, original goods even if they are a little more expensive initially. Usually, they have a longer life cycle and won't need any repairing or replacing for a long time, hence you will not incur maintenance or replacement costs in the future. Always confirm the brand warranty and go through customer reviews before making your purchase.
5. Create a budget and track expenses regularly
List your income and all your monthly expenses, whether fixed or variable. Use a spreadsheet. This will prevent you from spending too much and help you strategise your money better for savings and future purposes.
6. Prioritise paying off high-interest debts
Begin by eliminating the high-interest debts first, such as credit cards or payday loans. This is referred to as the avalanche method. You continue to make the minimum payment on all your debts, but you direct any additional money you have towards the debt with the highest interest. This, in the long run, saves you more money on interest.
7. Build an emergency fund
Maintain three to six months' worth of vital expenses in a different savings account. You may begin by setting aside a small amount, such as ₹5,000 or ₹10,000 per month, and increase it in the future. Spend this money solely on actual emergencies, like medical expenses, losing your job, or emergency repairs.
8. Use credit cards wisely
Use a credit card only if you can pay the complete amount on time. Don't pay only a part of it, or you'll have to pay extra interest. Set reminders for your payment due dates and monitor your spending on your card's mobile app.
9. Smart shopping for major purchases
Look up prices online, see what others have to say about the product, and shop during festival or clearance sales. Compare prices of products from different websites. Save some money as well by purchasing refurbished or open-box products from reputable sellers.
10. Make good use of any extra or unexpected income
Additional income like bonuses, tax refunds, or gifts towards savings, paying off debt, or investment. Avoid emotional spending. You can keep aside a small amount, say 10% to spend on luxury products and utilise the remaining balance effectively.
11. Deactivate any auto-subscriptions or memberships
Keep a check on your monthly subscriptions every month; these could be streaming services, software, or gym membership among others. Cancel the subscriptions that you don't use regularly. Keep track of and eliminate recurring payments.
12. Lower your energy costs
Turn off lights and appliances when not in use. Replace old light bulbs with energy-efficient LEDs. Opt for energy-efficient appliances that have high star ratings.
13. Lower your cell phone bills
Review your current mobile plan. If you are not taking advantage of all the data or perks then you might want to think about moving to a lower priced plan. Check prepaid plans, family plans, or packages that come with internet and mobile services. Try to connect to Wi-Fi when it is present in order to preserve your data.
14. Avoid spending money on outside food or entertainment purposes
Restrict dining out and unplanned expenditures at social gatherings. Allocate a budget for recreational activities each month. Cook at home, have people over, or go for free events in the locality to budget. Monitor entertainment expenditure to remain within budget.
15. Do it yourself
Learn basic household tasks such as replacing taps, stitching your clothes, etc. Making such small repairs yourself reduces paid services and equips you with handy life skills.
16. Sell anything that you no longer need
Declutter your area and dispose of unwanted items by selling them through portals. This allows you to generate additional income and decrease maintenance expenses. Keep things clean and operational for better resale value.
17. Make saving a habit
Treat saving as an automatic monthly bill. Create automatic deposits into a savings or investment account on your payday. Begin with a small amount and increase your contributions as your income increases.
18. Stay disciplined
After creating the budget, choose a financial plan and invest in an insurance plan to have a regular flow of income. You should remain committed to the plan and invested to avail the guaranteed benefits for all financial requirements. The sooner you invest and the more time you are invested, the better your returns.
Important tips to know about saving funds
Here are some tips that may help you save funds:
Tip 1 – Keep track of your expenses
Utilise a budgeting application or just have a notepad to note daily expenses. This will allow you to realise wasteful spending and eliminate it, enabling you to channel that money into savings.
Tip 2 – Make savings a priority in your budget
Save money like a bill. Set a savings percentage (e.g., 20% of pay) and move it to your savings account before buying anything else. This creates discipline and habits.
Tip 3 – Establish your financial priorities
Set specific goals in short-term (holiday), mid-term (buying a car), and long-term (retirement, education of child). If you know what matters most, you can select the appropriate savings plan and remain motivated.
Tip 4 – Allocate a budget
Set a monthly budget and stick to it. Use envelope budgeting or tools, to avoid dipping into your savings. Resist impulse spending and aim to save even from tight budgets.
Tip 5 – Evaluate your spending habits
Look at your previous 2–3 months of credit card and bank statements. Identify areas of spending and reduce unnecessary expenditure. Transfer the saved fund to your savings or emergency fund.
Tip 6 – Involve your family
Make saving a collective goal. Sit down with your family and discuss monthly budget and savings goals. This promotes accountability and cooperation.
Tip 7 – Find ways to reduce spending
Eliminate unused subscriptions, shop after preparing a list of required items and avoid unwanted expenditures. Use cashback and discounts when they're offered. Cuts in everyday expenses go a long way in accumulating monthly savings.
Tip 8 – Set savings goals
Set specific objectives to your savings, short-term (holiday, device) or long-term (house, retirement). This assists you in choosing appropriate instruments.
Tip 9 – Open a savings account
Open a new savings account. Deposit a set amount into it each month. This avoids impulse spending and establishes a specific fund for investments or emergencies.
Tip 10 – Invest in savings plans
Take up life insurance savings schemes for systematic savings and protection for the future. These schemes provide you with returns and financial security, keeping you ready for planned and unplanned expenses.
Tip 11 – Automate your savings and investments
Make auto-debit arrangements for SIPs, regular deposits, or insurance-associated saving plans. This discourages lavish spending and ensures the habit of savings without fail.
Why is saving money important?
Saving is a habit that brings discipline to financial planning. Saving money is necessary for the following reasons:
There should always be an emergency fund to manage unpredictable contingencies in life. It could be a home appliance or vehicle repair, family expenses, special events, etc.
There is a certain lifestyle that you are used to. To maintain the same living standard your whole life, you must save a portion of your money. Though your income continues to rise, it might not be enough for your needs and desires at all times, particularly with the rising inflation rate.
If you are the sole earner in your family, you need protection for your family financially in case of your absence.
There should be a plan to save for having a good life after retirement.
Conclusion
Having learned about the need to save money by investing in a savings plan and doing it appropriately, you need to take the necessary steps as soon as possible. The earlier you invest, the higher your gains and returns can be. Also, the price of enjoying such schemes can be less if bought at an early age. Save money monthly, invest in a savings insurance policy, and secure your life along with the lives of your family members in the right way.
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