Saving money does not need a high income or limiting our lifestyle. We can save even without compromising our lifestyle. Let's find out how?
We work hard to earn a living and meet our financial goals.
However, simply earning money does not mean that we can take care of our financial goals. We need to save too.
Saving money means setting aside a part of our income towards an investment avenue to earn returns.
When we save regularly, we can build up financial support to meet our financial goals.
However, when it comes to savings, many believe that to save, we need to cut down the expenses and live a frugal life. This restricted lifestyle acts as a deterrent to savings.
While cutting down expenses is important to step up our savings, it does not mean compromising our lifestyle or making lifestyle changes that save money.
We just have to handle our money smartly so that we can enjoy our lifestyle and at the same time also save money.
Let us understand how to do that, here are some tips that can help us save without restricting or compromising our lifestyle -
1. Save first, spend later
In the words of Warren Buffet, 'Do not save what is left after spending, but spend what is left after saving'.
So, rather than regretting that our income is not sufficient to save, save first and spend later.
The best way to ensure that we save every month is to do it as soon as the month starts.
When we get our salary or income, set aside a part of it for savings and investments.
Once we do that, we can use the remaining income to pay for our lifestyle expenses.
This way, we would be able to save and even manage a lifestyle that our income can afford.
2. Make a budget and stick to it
We need to know our income and expenses to chalk out how much we can save.
Moreover, when we know our expenses beforehand, we can make a provision for them without running out of income.
So, every month, make a budget. List down the income on one side and expenses on the other.
We can save some extra money if our income is more than the expenses. Alternatively, if our expenses exceed our income, we need to make adjustments.
We need to cut down the unnecessary expenses so that our income is sufficient to pay for them.
Also, after making a budget, do not deviate from it. Do not go overboard, as our entire budget would get hampered.
3. Look for a passive or additional source of income
A passive source of income can be generated without having to work for it. Examples include rental income from property, interest or dividend income from investments, etc. So, look for such a passive source of income to boost the overall earnings.
If we don't have a passive source of income, we can also look for a side income.
See if we can put our hobbies or skills to use and earn additional income from it. This would also increase our income and help us save without hurting our lifestyle.
4. Look for cost-effective alternatives
Rather than cutting down expenses, we can look for cost-effective alternatives that save money.
For instance, if we and a colleague live nearby, we can carpool and save on fuel costs.
Similarly, if we love eating out, try to look for deals and discounts. We can also look for budget-friendly eateries to cut down on the bills. We can also try making new dishes at home to reduce the instances of dining out.
Cost-effective alternatives help us maintain our lifestyle and allow us to save too.
5. Manage debt efficiently
If we have availed of a loan or if we have a credit card debt management becomes essential.
Debt management means managing our debts in such a manner that our interest outgo is reduced and the debt becomes easy on our pockets.
To manage debts, pay off high-interest debts, like personal loans and credit card bills, first. This would bring down the amount of interest paid.
Then, ensure to make the repayment on our loans as and when they fall due. Missing any repayment incurs additional expenses, something that we should avoid.
6. Plan your taxes
The Income Tax Act, of 1961, offers different types of exemptions and deductions.
Both these clauses help us reduce our tax liability and allow us to enjoy a higher disposable income.
So, we need to plan our taxes effectively. Look for the available exemptions and deductions so that we can save more without avoiding our tax liability.
7. Invest wisely
Lastly, to continue enjoying a good lifestyle and secure our financial future, investments are a must.
Investments help us earn additional returns on our savings that make our savings grow.
There are different types of investment avenues available in the market. Choose an avenue that -
- Matches our risk profile
- Aligns with our financial goals
- Suits our investment horizon
- Gives attractive returns
- Helps save taxes too
- Moreover, we should avoid waiting for our income to grow to save. We can save in small amounts too. Also, we shouldn't wait to save and try saving whenever we can, for example, using a piggy bank. We should try to automate the saving process, so we do not forget about it, like creating an RD or using the apps that help in saving little amounts, automatically. These savings apps can help save as little as Rs.10 to get started.
The bottom line
We don't have to make lifestyle changes to save money. We can save money with some simple tips that have been discussed above. Just be a little prudent with the savings and expenses. Try and set aside a small portion of the income toward savings so that we can accumulate a good with time. Remember, always save and then spend the remaining. We can use the apps for easy and automated savings and also invest in gold to get returns based on its price movements.