We all want to save money from salary for the future. We understand how important it is to secure your retired years with robust financial support. We also know that savings come in handy during emergencies. And yet, we often find ourselves left with too much money at the end of the month.
Nobel laureate and behavioral economist Richard Thaler has called saving for retirement a ‘cognitively hard and obviously preposterous’ activity. There are some simple tips you can follow to save more. The key is to analyze your spending and strategize, so you don’t have to overthink when doing the right thing.
Here are some research-backed saving tips that can help you plan your finances and save smarter this year –
- Change Your Spending Habits – If you are an impulse buyer who spends their paycheck before realizing it – know that you are not alone. Think about the occasions when you are prompted to spend and think twice before purchasing. A minor change of saving financial habits will help you spend less and be wise about your money.
- Make a Budget for Your Expenses – Make a budget at the beginning of the month and stick to it. People of all generations have benefitted by budgeting and tracking their expenditure – and you can do it too. Preparing a budget helps you find out where your money is going.
- Start Investing – The next step is investing in different options suitable to you. If you wish to invest a small amount every month, choose a recurring deposit. If you have to pay a fixed amount every month for the recurring deposit, it will become a part of your budget. Else, you could invest in mutual funds by starting a systematic investment plan. Research and learn more about the best investment alternatives in India.
- Say No to Debt – Reduce your existing debt, if any and don’t take up any new debt as far as possible. Debt may be the most significant barrier between you and a higher standard of life. Debt eats into your earnings and prevents you from investing any money for your future. Develop a habit of not taking debt unless it is an emergency.
- Regulate Your Savings – Sometimes, the best way to start a habit is to make it a mandate in your budget. Start a recurring deposit (RD) or a systematic investment plan (SIP) wherein your deposits are automated. The idea is to make saving as easy as possible and spending as tricky as possible.
- Make Saving Goals & Increase Them Over Time – Make a savings goal and increase it periodically. Once your money-saving plan is clear, you can aim to increase the saving rate alongside the rate of increase in your earnings. Whenever you feel comfortable raising your savings, add one per cent more to your monthly savings.
- Focus on Smaller Goals – Setting a goal is easy, but it may look daunting once set, especially when you are starting. Break your goals into smaller, more manageable pieces to motivate yourself. Start by committing to saving $5 every day and slowly work towards your monthly plan. For example, if you want to save 1000USD in seven months, you will need to keep at least 150USD per month from reaching your goal.
There you have it, seven simple tips to save better every month. Keep the bigger picture in mind when working to achieve your long-term money saving goals and stay invested. Managing your money wisely will help you save better – not just for your retirement, but also to buy all the things you love.
Aatish Khanna works with the Content Marketing team at Money Club – a digital chit fund platform that makes saving, borrowing, and investing your money more efficient. He writes on topics to help his readers understand processes so they can make better financial decisions. He’s the go-to person that his family, friends, and colleagues turn to for all their money matters. He loves to play board games and aspires to one day build his one finance-related board game and app.