In this age of consumerism, with a plethora of goods and services fighting for your attention and limited resources, it could become diffi...
In this age of consumerism, with a plethora of goods and services fighting for your attention and limited resources, it could become difficult to save for your future. And despite the availability of easy credit, saving money is often the best way to ensure that you live a comfortable and stress free, debt-free life; it assures that you have a secure financial future.
Life is full of unexpected surprises and having money saved up can help you deal with these occurrences. Without any money saved up a small upset could seem like a crisis. If you are struggling to save, here are few things you can do to develop a healthy savings habit and build a robust financial future.
1. Save First, Spend Later: Don’t save what is left after spending at the end of each month; spend what is left after savings. If you want to build your wealth, putting money into savings or a long term investment should be a priority, not an afterthought. If you plan to save what is left at the end of your budget period, then you may end up saving nothing. So rather than spending first and (maybe) saving later, save first and then spend the rest without worry. Put your savings exercise on auto pilot by starting a SIP or a recurring deposit wherein money is deducted from your income account at the beginning of every month. This will automate the whole process of saving.
2. Create a Monthly Budget & Stick to it: Once you know how much money you have for expenses, budgeting becomes essential. If you do not already have a budget, then need to make it right away. This will help to keep a track of your money. Today, most of us use plastic money to make our purchases instead of using actual cash. While this is really convenient and more secure, it dramatically reduces our sense of how much we spend. Most of us don’t keep running totals in our heads from purchase-to purchase.
As a result, we don’t know how much we have left. This disconnect makes it easier for us to overspend. By following a budget and keeping a track of spending, you are less likely to overspend.
3. Avoid impulsive buying: Impulse purchases rarely fit into our overall financial plan. Say “no thanks” to impulse displays and follow your plan. Before making any purchase, you need to ask yourself whether this is something you need, or something you’re buying on impulse just because you want it now. If it is really something you need, plan and budget for it, then purchase it. This will help you to resist or avoid impulsive buying and save for a brighter tomorrow.
Warren Buffett quote on Spending: “If you buy things you do not need, soon you will have to sell things you need.”
4. You are working hard; make your money work harder: There are two ways to increase your savings – by cutting back on expenses or increasing your income. After exploring various ways to cut back on expenses, you could look for avenues that allow you to increase your income too. One of the most efficient ways to increase your income is to make your money earn more money for you. You can do this by investing it optimally in avenues that allow it to grow.
5. Convert a hobby into a profession to augment income: Another way to increase your income, without taking on additional work stress, is to convert a hobby into a profession on the side. While your job takes up most of your day, you could spend your weekends or time at home pursuing some activity that you enjoy, which can be monetised. Depending on your interests, you could even set up a parallel business such as catering, electrical repairs, floral arrangements, photography, babysitting, etc.
6. Consult a Financial expert: You can consult a financial expert who will provide you with a road map for a better financial future. There may be expensive habits that you can cut back and smart habits to develop. Involving a good financial planner will improve your savings behaviour, in general, as well as your saving for long term goals, particularly retirement.
Conclusion: To make savings a habit, it is necessary to follow few things i.e., Save First, Spend Later, Know what you need and what you want; wants leads to overspending in your finances. Make your savings-cum-investment plan and follow it rigorously. There is no better time than the present to set your savings plan in action. Money that you save today is worth significantly more than money you save tomorrow, since it has more time to grow and compound. Every day you save is an opportunity to build more money and secure a good financial future.