Saving money can be troublesome. But, it is necessary for your financial future. So, we have compiled seven habits of people who are good at savings to help you to become a pro.
Saving money can be troublesome. But, it is necessary for your financial future. So, we have gathered seven good saving habits of successful savers to help you get better at savings.
How much savings do you have under your name?
Have you started investing in mutual funds and digital gold yet?
Savings, investments, and expenses are crucial parts of our lives, regardless of our monetary status.
It doesn't matter how much you are earning per month; you need to maintain a balance between these three attributes.
For most of us, saving is a concept we struggle with, let alone sparing money to invest or keep in the savings account for emergencies.
If this sounds like you, then here's what you must do - you need to inculcate successful saving habits to ensure enough funds are deposited in your accounts to meet your future demands.
In this blog, we'll uncover 7 habits of people who are a pro at savings and how you can follow their footsteps too.
1. They have savings in multiple accounts
One of the best seven habits of highly successful savers is that they have multiple accounts and deposit a certain amount in all the accounts every month.
Dedicate each account to different purposes like retirement, travel, emergency fund, etc. This will help you to manage all your savings and let the money grow eventually.
Some of the best ways to invest in multiple accounts are:
- Start with the retirement account first. Deposit 10-15% of your monthly earnings at the most in it. Do not fall below 10% of the savings, as that will result in significantly less. You can choose to start a SIP for this.
- Since everyone needs a vacation at least once or twice a year, open a short-term mutual fund dedicated to your travel savings. You can deposit variably according to the funds you have in hand after managing all the expenses.
- Health savings is crucial for everyone, even if you have insurance coverage. Ideally, you should stack 6-9 months' worth of your monthly paycheck as an emergency fund. Do not touch this amount unless it is an emergency like unplanned hospitalisation or a medical crisis for a family.
- Maintain a savings account for all your daily expenses. It is for your food bills, grocery, and other utilities. Keep 40-50% of your paycheck in this account.
2. They truly understand the difference between need and desire
Appropriately understanding the differences between needs and desires is crucial for maintaining a budget.
People who are good at saving understand that need is something you have to fulfil for survival, but desires are optional and not mandatory to be fulfilled.
For instance, electric, grocery, broadband, and other expenses are your needs because you won't be able to survive properly without paying these.
But if you want to buy an Xbox or a couple of new dresses, it is considered desirable. Instead of buying it immediately, you can make a proper plan to fulfil your desires without putting your funds at stake.
For instance, you can buy the Xbox after saving for it for a few months or find cheaper alternatives to buy the dresses.
Once you’ve accumulated enough money to spare after all the expenses and investments, you can fulfil your desires.
Always remember that your needs are your priority. Everything else is secondary.
3. They always track their monetary actions
Earnings, expenses, and savings are a part of everyone's life cycle. But, people who diligently save know that it's best to track their expenses to analyse their financial actions better every month.
Tracking monetary actions is probably the smartest way to understand where the money is being utilised.
And that's one habit that you should pick up. Managing your money will give you insights into your cash inflows and outflows, making the task of saving money easier.
4. They do not spend on impulse
One of the most successful saving habits is to stop making impulsive decisions concerning your finances.
For instance, if the latest mobile catches your attention, you'd get so eager that you buy it without considering whether you need it or how this purchase would affect your budget.
The funds you invest in that mobile phone could have helped you to invest more money for your retirement plan.
This is an example of an impulsive financial decision you must be wary of. If you're much of an impulsive buyer, it can be tricky to control your spending habits in one go.
However, a little practice and patience can help you become successful.
Some of the best ways to deal with impulsive buying are:
- Always delay your purchases as long as possible, especially if it falls in the "desire" category. This will help you to manage your finances appropriately.
- Prepare a budget plan and stick to it, no matter what. This will help you to avoid impulsive decisions that can later hamper your finances.
- Since you have unlimited access to the online shopping window, it can be hard to stop the purchases. So, setting a 'No unnecessary spend' month is a good idea. This will remind you to control your spending habits.
- Set a rule for yourself that every time you spend money on something on a whim, you will set aside an equal amount of money toward your savings. Make this your habit and see how quickly your impulsive spending habit reduces.
5. They invest in the future and start it early
Investment is the only way to build wealth. So, the earlier you start investing, the greater your wealth will be.
This way, you don't have to worry about having a shortage in your funds when you retire.
But that doesn't mean you should live frugally in your youth and not enjoy a better part of your life. Some of the great ways to make investments are:
- Stock Market: Invest in the stock market (only if you have substantial knowledge about it). Most successful people who are great at savings invest in the stock market for the long term to earn higher returns. They are careful about the volatile price movements of the stock exchange and take the necessary measures to protect themselves, such as investing in mutual funds or small cases instead.
- Digital Gold: It's a good idea to invest 5-10% of your earnings in digital gold to fight against inflation. There are many ways to invest in digital gold, such as a sovereign gold bond, gold ETF, gold future, or e-gold, but the easiest is using the Jar app because its auto-investing feature helps you to maintain consistency.
The Jar App is a micro-savings platform that acts as a digital piggy bank for its users. The app detects your online purchases.
It then rounds off the amount nearest to 10 and generates a spare change for your expenses.
Then the app automatically deducts the change amount from your bank account using UPI to invest in 99.9% pure digital gold through SafeGold.
Use the Jar app for daily savings and invest in gold without effort. The Jar app's auto-investing feature makes it easy for those not very good at daily saving and investing.
- PPF: PPF is one of the most underrated retirement savings plans. It offers 7% interest and is tax-free. You can save any amount you are comfortable with until you retire and reap the benefits after you hit 60. It prevents the account holder from pre-maturing the deposit, but borrowing is possible at an additional 1% interest (i.e., 8%). But you have to return the money at the earliest.
6. They keep debts to a minimum
Debts are anchors of your financial freedom. People who are savvy about savings ensure they have minimal debt. Not all loans are bad.
Loans like home loans offer tax redemption on the principal loan amount, which is good. But one of the worst debts to have is credit card debt.
You should pay off these kinds of debts without any doubt. Ensure to pay your debts regularly and never miss a payment.
Otherwise, you will have to deal with problems like late payment fees, low credit score, future loan application rejection, etc.
7. They stick to the prepared budget
You will have enough funds to make the deposits as per plan. Besides, the budget will help you to prevent impulsive purchases, extra and unnecessary cash outflows, among others.
Ensure that you stick to the savings in your budget to ensure your cash inflow and outflow are appropriately managed.
Knowing how to save money can help you take appropriate actions to prepare for your future.
Now that you know the secret habit of people who are good at savings, you can try implementing them in your life and witness the change in your financial future.
Besides, the savings will also help you to ensure your emergency funds are intact, and you won't have to depend on anyone else.