Every one of us has heard the importance of saving for a rainy day But it’s easier said than done. This post is worth reading if you’re one of the people who finds it tough to save money. Low income is frequently cited as one of the main excuses for people’s failure to save and invest money. This is not totally correct. It’s not difficult to save 10% of your monthly income, even if you make between Rs. 25,000 and Rs. 30,000. All you have to do is to simply list your fixed and variable expenses, examine your spending patterns and determine how to cut costs where possible.
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So, what really is the best way to save money? Are there some tips on how to save money that can make a difference? So, if these are the questions running in your mind, in today’s post, I am going to share with you 15 money saving tips.
Why Is It Important To Save Money?
Unexpected expenses frequently arise, and borrowing money at the last minute can be quite difficult. Imagine yourself in a situation where you have a sudden medical emergency and need money urgently for treatment. Your bank is closed at this time, and it’s likely that your buddies are sleeping. Swiping your credit card could result in you racking up additional debt that, over time, you may not be able to pay off. Additionally, there is no time to apply for a loan. In such a situation, if you have your own savings, you don’t have to depend on anyone.
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Money Saving Tips
Let’s take a look at 15 tips on how to save money that will really make a difference for you.
1. Set A Budget
The first and foremost money saving tip is to set a fixed budget for the whole month. This will prevent you from overspending. Similarly, you will also be able to save a certain amount of money at the beginning of every month.
There are four things that you need to consider while setting a budget:
- Monthly Income
- Monthly Expenses
- Lifestyle Expenses
- Allowance For Emergency Funds
Of course, you can also add other factors that you want to include in your budget. It all depends on your preference. The only important thing is that you must create a budget.
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2. Avoid “Buy 5 Get 2 Free” Deals:
If you are out for shopping and see such offers, you won’t be able to resist your temptation to buy them. But before you buy one extra item in order to get something for “free”, ask yourself if you really need that extra item. You went out to buy one shirt, and ended up buying five for the price of three. The question arises, did you really need three shirts?
Now the tip here is that you need to change that habit. If you don’t need it, don’t buy it, even if the amount is small. Spend less and save more!
3. Avoid Cards, Use Cash
You are likely to spend more if you use your debit or credit card. It is human tendency, if you use cash you will spend less, because giving away your hard-earned cash is harder than swiping your card.
4. Have A Target Savings Amount
Frankly speaking, if you don’t know what you will be doing with the saved money you will not be motivated to save. So, setting a goal in terms of the amount and the specific purpose is another important tip on saving money.
5. Use Technology To Save Money
It can be tedious doing manual calculations with your money. So, use technology to help you in this task. There are several money saving apps to help you budget your money. These apps can help you track your income, analyze expenses, and set goals for savings.
6. Start A Non-Stop Investment
Starting an investment is one of the best money saving tips to follow for those wondering how to save money each month. You can think about opening a National Pension Scheme, a recurring deposit (RD) account, or a long-term insurance policy. By doing this, you will be required to make a specific amount of investments each month, regardless of your expenses. You can select from the best investment alternatives available in the market. If you are new to investing, you may also take the help of an experienced financial advisor. Also you must develop the habit of investing early.
Another saving tool where you can put in money regularly is chit funds. Chit funds are a saving as well as borrowing financial instrument. For expenses that you are likely to incur in the short to medium term, you can contribute into an appropriate chit fund scheme for a tenure of 2-3 years. So when it’s time for the actual expense, your money is ready to use! No worries of debt or interest. God forbid if you are faced with a financial emergency, the chit fund gives you a quick liquidity option to tide over the situation. In a chit fund scheme, even if you take out the entire amount early, your monthly payments cover both the principal and interest. In this way, you will be debt free at the end of the tenure.
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You can read: Traditional Chit fund Companies vs The Money Club
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7. Buy Health Policies
It is better to buy health policies for yourself and your family than to lose all your savings in case any of your family members get sick. More so, when medical expenses are becoming more and more costly. You can compare the price of health policies online on websites like PolicyBazaar, PaisaBazaar and opt for the best one.
8. Eat Home Cooked Food
Another vital money saving tip is to eat home cooked food. It is not only best to save your money but also to keep you fit and healthy. Even those who go to office regularly should bring lunch from home to work. While occasionally eating out is not a bad habit, doing so frequently could be unfavorable to your health and finances.
9. Personal Cleanliness
One of the main factors contributing to teenage acne, pimples, and other skin issues is poor personal hygiene and cleanliness. Therefore, you should keep excellent personal health to prevent having to pay for medical services or unnecessary creams and lotions.
10. Bargaining Skill
Bargaining is a skill that you should know where, when, and how to use it. Obviously, you cannot bargain in a branded store. However, you can bargain while shopping from street-side vendors as they often quote you higher prices. If you know how to bargain, you may get the stuff at the best price, thus saving some money.
11. Minimize Your Rent
Making significant savings for the future is preferable to paying expensive rent. Spending a lot of money on a rental home that will only burden you is pointless. It is preferable to select a less expensive location and save some of the rent you were previously paying. You can use the money you save to buy the house of your dreams.
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12. Pay Bills On Time
Now, this is the best tip on saving money. You must pay off your electricity, phone, or water bills before the due date. Paying after the due date may charge you a penalty fee. So, in order to avoid any unwanted and avoidable charges ensure that all your bills are paid in time and you save that money.
13. Follow The 50-30-20 Rule
One of the best money saving tips is the 50-30-20 rule. It is basically a guideline on how to allocate your income into different categories. As per the rule, you must spend 50% of the income on necessities. 30% of the income can be spent on lifestyle. 20% of your income must be set aside for savings and investments.
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14. Additional Income
Based on your skill you can look for some online ways to earn more money. You can do some freelancing or part time work. Many companies and startups require people to do work on a short-term basis. You can check out freelancing opportunities that require your skills. In this way you can gain some experience as well as earn money. More money means more saving. You can also convert your hobbies or talents to income sources. They can also serve as a backup or passive income in case of any untoward circumstances.
Related: Difference Between Active Income And Passive Income
15. Socialize Sensibly
This is another great tip on saving money. You must make friends wisely. Too wealthy friends could leave you in big trouble as it may force you to spend more than your capacity and disturb your budget. Making friends with those who are financially weak is also risky as they may borrow money from you, which they could never repay. Both situations are challenging. That’s why, it is always recommended to socialize intelligently and make friends with those who have a similar financial background as yours.
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Saving money is a crucial thing that you need to learn early in your life. Only then will you be able to enjoy life without going through financial difficulties in the long run. All in all, the most important tip on saving money is consistency. It is the main key to being able to practice all the money saving tips we discussed above.