Saving money is a great way to discipline your life and plan for long-term goals that help you grow. Whether it is something as small as paying in change to use up your coins or taking a cheaper mode of transport whenever you can, saving money is a habit that comes in handy at all stages of life. Listed below are a few effective money-saving tips that are not only easy to follow but are also big on returns.
1. Budget your money
One of the best money-saving tips is to budget your money for your expenditures each month. While coming up with a plan to set a budget is a fairly simple task, what isn’t that easy is sticking to that budget. Following a fixed budget helps to ensure that you don’t spend too much and that you still have enough saved up at the end of each month. While setting a budget, make sure you stick to a number that is realistic. For example, while saving 50 percent of your income might be difficult, saving just 20 percent each month can be easier. As you get used to the habit of saving, you can slowly increase the amount you save each month.
2. Start an investment you can’t pause
For those wondering how to save money each month, starting an investment is one of the best money saving tips to follow. You should consider starting either an RD (recurring deposit) account in your bank, a National Pension Scheme, or a long-term insurance policy. This way you will have to invest a certain amount every month, regardless of what your expenses are. Starting the habit of investing early on will ensure you have sufficient funds in the long-term. However, since these investment schemes can’t be liquidated easily, you will still have to save additional money for an emergency fund that you can access immediately.
3. Funnel your salary into two different accounts
If you find it difficult to stick to a budget, it can be useful to have two separate accounts for your salary. One account can be used for your monthly expenses, while the other account can be used just to save money. This is also one of the best ways to save money if you are unsure about making a long-term investment plan. If you want to take the extra step, you can ask someone you trust to keep the account details with them, so you won’t be able to use your savings fund even if you want to. Some companies even allow salaries to be sent to separate accounts, so you can ask your company if they can do this for you.
4. Don’t put all your eggs into one basket
Most IT professionals today are obsessed with investing in mutual funds, while those working in the public sector tend to invest exclusively in fixed deposits and government policies. One of the most well-known money management tips followed by successful people all over the country is to divide investments across bonds, mutual funds, fixed deposits, LIC policies, PPF, etc. This will help you in lowering your risk in case one type of investment underperforms.
5. Cut down on impulse purchases
Although it’s good to pamper yourself now and then, making impulse purchases on the regular can eat into your savings in the long run. Despite the fact that this is easier said than done, one of the most reliable and best ways to save more money is to think carefully before every purchase. Always ask yourself the question, “do I really need this?” before buying a new product. If you’re not sure about it, take a week or two and then decide if you still want it. You should also try to come up with a cheaper alternative or postpone the purchase to another time, when it will become absolutely necessary.
6. Keep a close track of your credit card expenses
Credit cards can help greatly in saving money when used in the right manner and for the right reasons. However, when used too much, credit cards can cause a huge strain on your finances. With high-interest rates and exorbitant annual fees, getting and using a credit card can be very expensive. Keeping track of your dues and clearing them as soon as you can so that they don’t get out of hand is one of the most essential money management tips to follow. You can also find other ways to gain credit without using credit cards. ZestMoney, for example, offers no-cost EMI and credit limits, which can help you avoid the extra charges that come with credit cards.
7. Spend your bonus wisely
While it is human tendency to want to make more purchases after getting an increment or a bonus, the key to saving more money is to invest any increments, at least partially. Funnel all your increments and bonuses into an SIP of a mutual fund, so that you aren’t tempted to spend them. Investing increments and bonuses instead of spending them is one of the most effective money saving tips that successful people follow.
8. Pick the right bank as per your preferences
With a number of banks (both in the private and public sectors) to choose from, one must always perform thorough research before making their choice. Weigh the options against each other, by carefully considering factors such as interest rates and returns, offers, rates for loans, ATM charges, overdraft charges, etc.
9. Make a few lifestyle changes
When it comes to money management tips, it is best to sit back and look at the lifestyle you’ve been leading, to come up with easy ways to save money. For example, instead of eating out very often, you can buy the ingredients at your local store and cook a meal at home. You can also have a strict budget for leisure activities like watching a movie or catching up with friends for a coffee. In a nutshell, enjoy most of your leisure activities at home and you’ll be pleasantly surprised with the ease in which you can save money.
10. Get a ‘savings buddy’ to join you
Include a family member, friend or spouse, when you are budgeting and planning finances. Another person’s perspective always helps when it comes to thinking about clever opportunities to save and finding cheaper alternatives. Having a partner on your savings journey can also keep you motivated to stick to your budget and resist the temptation to splurge on unnecessary expenses.
11. Work towards paying off your debts
A sure-shot way to save money is to first close all the outstanding debts that are consuming most of your income. Not only do debts weigh you down, they also add to your expenses in the form of interest rates that cannot be avoided. The money paid against interest can easily be saved if you prioritise closing the debt before anything else. Try paying more than the minimum amount each month. It is also a good idea to pay a lump sum when you get a yearly bonus. The best way to avoid extra charges each month is to choose an EMI plan with no interest on the monthly payments.
12. Plan ahead
While budgeting helps to plan current expenses, it is crucial to look ahead into the future as well. This is perhaps one of the most overlooked of all money management tips. Carefully assess your financial goals and future expenses. Start saving right away for that new phone you want to purchase, the closet makeover you are planning or the holiday that’s been on your bucket list forever. Make it a point to keep these expenditures in mind, when making impulsive purchases.
With these useful ways to save money, you can manage your income better and achieve your financial goals! Money management is always easier when you have a hassle-free no-cost EMI plan that doesn’t require a downpayment. If you’re ready to look at a smarter way to purchase on EMI, sign up with ZestMoney now and get your credit limit.