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How to save money – 7 effective money-saving hacks 2020-

ways to save money

If you are someone who always finds hard to save money then this article is for you.

Here, I’ve shared some practical steps which you can easily apply in your daily life and save effortlessly.

so stay tuned till the end!

Know Your “WHY”-

No matter how cliché it sounds but understanding your “why” is important.

When there is a clear purpose, it becomes easy for the mind to make the right choices.

why to save money

Ask yourself, why do you want to save? the reason could be anything buying a camera, going on a trip, or even saving money for your retirement.

Once you do that, the remaining part will become easy.

on the other hand, without a clear goal, it becomes very difficult in the world where everyone is trying to sell you something.

Tip: Your primary goal should be to create an emergency fund (6 times of your monthly expenses) This money will allow you to live for a few months if you lose your job or if something unexpected comes up)

How much money should one save?

Well, there can’t be a specific number because it may vary from person to person, but you can start with at least 20% of your income amount.

Tip(take the comfortable amount, don’t be so hard on yourself, remember it’s a habit, start with small to stay consistent!!)

Actionable tips-

1.Automate your savings:

Automation is one of the most effective methods because it’s hassle-free. You need to set it up once with your bank and a fixed amount will be deducted from your account each month and redirected to a fund chosen by you. It could be SIPs, EPF, RD, Gold SIP, PPF whatever you choose. It’s always best to go for the option which has the potential to beat inflation,

It feels great when you know a fixed amount is going into savings each month and you watch that money growing.

2.Use your credit card smartly-

Yes, the credit card can help you to save money. Although the risk of getting into debt is high but when you use it responsibly, it can save you money.

To attract customers, credit card companies give a lot of discount offers, and rewards on groceries, electronics, travel, hotel bookings, flight tickets etc. Of course, they are not doing it for charity, they make money by charging huge interest and penalty from the users who fail to pay off their bill at the end of the month.

So, as I said earlier if you can use it with discipline and pay off your bill before the due date every single month, then it doesn’t only save you money but also improves your credit score.

3.Calculate your “everyday pocket money”:

“Do not save what is left after spending, but spend what is left after saving”.

-Warren Buffett

Divide money left after reducing the saving amount and your bills from your income and divide remaining by 30, this is the amount you will give yourself for your everyday spending.

let’s say A has a monthly income of ₹40,000 and decides to save ₹8000 a month with fixed expenses of ₹20,000.

so, after reducing fixed expenses and savings from your income the money will be left is your monthly pocket money.

A’s monthly pocket money= income – total expanses – savings

=40,000 – 20,000 – 8000 = ₹ 12,000

and divide it with 30,

=12,000/30 = ₹400

So, now Mr A has a clear idea of how much he can spend in a day without any guilt.

(Note: it is just an example, you can do your calculations as per your situation, the idea is to just to make things simple and easy to achieve.)

4. Don’t forget to apply coupons for online shopping:

This wonderful chrome extension named ” honey” makes it a lot easier, once you add the chrome extension it will automatically search for the best code available and you can easily apply in one click.

5. Trim Unnecessary spending:

a).Apply the “cost per use” rule:

Before buying anything, calculate it’s cost per use, how?

cost per use= price of the product/number of times you can use it(rough idea)

suppose, you bought a dress of rupees 5,000 which you wore only 1 time so, the cost per use is= 5,000/1= ₹5,000

on the other hand, you bought a dress which you could wear on multiple occasions so you wore it 10 times

now , the cost per use is = 5,000/10= ₹ 500

Now, next time when you buy anything, keep in mind this formula and ask yourself is it worth buying or not.

b)Cook at home if possible:

I know it’s difficult if you live away from your family but it’s pocket friendly. you pay five times more when you eat outside. Homemade food is great for your health too.

c)Stay away from impulsive shopping :

Believe it or not, few things you buy impulsively and you regret later, ask yourself these two simple question whenever you shop something:

  1. Do I need this for the next 100 days? if not, don’t buy it.
  2. Do I have a similar item that can serve the same purpose? if yes, Don’t buy it.

6.Exercise well and eat healthily:

Take care of your body, it’s the only place you have to live.

-Jim Rohn

Lack of physical activities, eating junks and smoking may cause some serious diseases. It doesn’t only affect your mental and physical fitness but also affects your finances badly.

Making a few lifestyle changes like, exercising well and making healthy food choices not only keep you disease-free but also make you more productive and energized throughout the day which eventually helps you to grow.

(it’s highly recommended that first, you cover yourself & your family with good health insurance. It may save your lakhs of rupees on hospital bills.)

7. Keep Track:

keeping track will help you to analyse your spending pattern, and once you see where are you overspending, you can do something to control it. Doing it regularly will give you the confidence to have control over your finances.

There are a plethora of budgeting and money management apps like ET money, Walnut, Monefy etc which makes the process a lot easier.

#Conclusion:

It’s not necessarily important that you follow the same methods but it’s always good to try and see what works for you. Saving isn’t as difficult as it looks, it just takes a little bit of discipline to make the right choices.

Thank You!

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This Post Has 2 Comments

  1. Its really important for me …before reading this i never thought about savings …its very helpful thanku .

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