Are you struggling to save money every month? Here are a few tips on how to save money from salary every month…
Do you end up saving very little as compared to the amount you wanted to save?
It’s not your fault. It’s the education system’s fault.
It is unfortunate how the Indian education system does not offer financial education of any sorts. A 12th pass student will definitely know what Pythagoras Theorem is, but will not know how to manage his/her savings and expenses.
All these practical financial knowledge plays an extremely important role in the way you handle your finances.
But since we were not taught financial concepts back in school, it’s time we teach ourselves now.
Saving is not a very complex activity to do. It just demands your presence of mind and the ability to balance your expenses.
Also, one’s financial situation is majorly dependent on one’s mental state i.e. mindset.
One person having Rs. 10,000 in her bank account may think she is rich, while another having the same amount might feel she is broke.
You see the point I am trying to make?
Every person’s financial situation is unique.
Keeping in mind every person’s unique situation, I have made an attempt to come up with a few tips that are universal in their approach for saving greater portions of your salary.
I have been applying these principles and let me tell you, these are absolutely wondrous.
If I can do it, you can too!
Here are the magical financial tips on how to save money from salary…
1.Track your Expenses
I can’t even begin to elaborate on the importance of this principle.
This is the most significant step toward saving money.
Until and unless you analyze the procedure and spot the problem, how will you spot it?
You should carefully look into where your cash is coming in from and where your cash is going out to. This will enable you to recognize those areas where you should try to chop down your expenses.
For an easier approach, classify your expenses as needs and wants.
Now, what do needs and wants mean in financial terms?
- Needs are your fixed expenses. Here you don’t have an option to scale down your expenses. For instance, rent, medicines, utilizes, insurance etc.
- Wants are recreational expenses. Here you have an option to significantly scale down your expenses. For instance, going out with friends, movies, parties, impulsive shopping etc.
Track your expenses continuously for a month at least. Try to identify a pattern. Identify those areas where you are spending excessively.
You can keep a track using a spreadsheet or the traditional pen-paper.
So, track, track and track!
Keep tracking expenses, the best tip on how to save money from salary
2. It’s time to calculate
After you’ve effectively analyzed your cash inflows, it’s time to put your calculating caps on!
For this, first deduct your ‘needs’ expenses from your total monthly salary.
Now, decide an amount for yourself which you can spend on your ‘wants’.
This is how much you’ll be allowing yourself to spend every month on recreation, that gives you an answer on how to save money from salary.
Tip: Do not set this bar too high or too low.
A high bar will not help you in saving more.
A low bar that is practically not possible to adhere to will only frustrate you.
Try to set a reasonable amount for yourself.
The rest of the amount that is left will go into your savings.
Initially, you might find it difficult to live within a constraint, but trust me; you’ll get the hang of it eventually.
3. Pay Yourself First
This is the most basic finance principle.
Your priority list must look something like this: Needs → Savings →Wants.
Note that savings precede wants.
As soon as you get paid, transfer the amount you want to save to some other account. Take it away from your eyes. Deposit it somewhere where you don’t have easy access to it.
What will this do but?
Bachat helps you to do just that. It transfers an amount fixed by you to a separate savings account at the starting of each month.
What’s more, it rewards you for every rupee saved!
Can it BE any better for how to save money from salary?
4. Be Safe
Save some cash at home. A mini emergency fund.
You must have some spare cash at home just in case your car breaks down or some medical emergency arises.
5. Don’t raise your living standard with a salary raise
Don’t pay heed to the fact that you make more than your friends or that you got a salary raise. Continue to live the way you have in the past.
If you are young, let me tell you that no one really cares about what car you drive or which brand’s clothes you wear. This is because everybody is so self-engrossed.
Instead of living in a lavish house, consider renting a reasonable flat or studio. Don’t raise your living standard just because of peer pressure.
No. One. Cares.
If your friends are judging you for your lifestyle choices, it’s time you reconsider what kind of ‘friends’ you’ve got.
6. Be Consistent
Consistency is critical.
Many people might tell you to stop being so hard on yourself every time. But I am here to ask you to be a little hard on yourself.
Because a little discipline is necessary in order to achieve certain goals. Just a little discipline, a dollop of consistency and voila, you’ll have saved a lot!
It might get difficult at times to not spend excessively or to confine your recreation within a restrained budget, but trust me; it’ll be worth the pain.
Sometimes, you should give preference to logic over feelings. Bear in mind that emotional spending is extremely harmful to your financial health.
Summary – How To Save Money From Salary every month
If you follow these principles with dedication, you’ll discover that you can easily save up almost half of your salary every month.
Keep testing and challenging yourself by raising the amount you wish to save. Doing do will help you realize that even saving can be entertaining!
I understand that all these principles might not be applicable to your unique situation. If that is the case, try to adapt these principles using some flexibility.
Start your journey today on how to save money from salary.
Some of you may have other priorities like kids, debts etc. In that case, you don’t have to aim for a very high saving percentage. Save an amount with which you are mentally comfortable.
At the end, all I would like to say is that no matter how little you save, saving is an accomplishment for which you should be proud of yourself.
Saving something is better, well, far better than saving nothing.
Start saving today and reap the benefits in the future!