4 Ways to Save Money so that You Never Go Broke Again

For all of us, saving money can be a daunting task. Most of us tend to look at the several expenses we incur every month while juggling our personal and professional lives, and almost give up on the possibility to save money. Therefore, you may look at your salary just as a means to ‘make ends meet’ or ‘get by’ every month, without even considering the possibility of saving. But the truth is that saving even a little bit every month can make a lot of difference for your financial security. Once saving a part of your monthly income becomes a habit, you will be much more prepared to deal with financial difficulties.

Also, with the current COVID-19 pandemic, increasing your savings is more important than ever before. The coronavirus pandemic has brought all businesses to its knees, and employers are struggling to keep their business operations running smoothly. People all over the country have lost their jobs, and those who are still employed, live under constant threat of losing theirs too. So, the need for a ‘nest egg’ is more important than ever. Here are 4 effective ways in which you can save money:

1. Set a Budget

This is a tip all of us have heard before. If you want to save money successfully and in a sustained manner, creating a budget is the first step. This is because a budget is a tool that will help you first understand where your money is going each month. This will help you cut down on unnecessary spending and devote more funds where required. Now, there’s no set template for a budget, no ‘one-size-fits-all’ rule for everyone. The most popular budgeting role is the ‘50/30/20’ rule, where you allocate 50% of your monthly income to your needs, 30% to your wants, and the remaining 20% to your savings. However, this is not set in stone. You need to figure out something that works for you.

2. Save One-Third of Your Income

While this rule is not set in stone, you should save one-third of your monthly income, as that’s ₹1 for every ₹3 that you earn. If you start saving one-third of your monthly income consistently, then you will soon have saved up a significant amount to weather any financial difficulties that come your way. And as I said, in the current economic climate, you need all the savings you can get. If you’re not habituated to saving a certain amount of money every month, you can start small. Ultimately, it depends on how much you’re earning and your financial commitments. But the bottom line is that you need to set aside some money for yourself every month, no matter what.

3. Cut Off All Unnecessary Expenses

This is something that you must do so that you save as much money as possible. You need to cancel all subscriptions that you don’t use regularly, and also find cheaper versions of the same. For example, if you have the ₹499 Basic plan for Netflix, you could switch to the cheaper ₹199 Mobile-only plan. You still get access to Netflix, but you also save money. Also, do you really­ need a YouTube Premium or Spotify subscription? These are just a few examples, and there may be many more apps or subscriptions you may not even need, at least not on a daily or weekly basis. You need to unsubscribe from such services, and you’ll be surprised at the amount of money you save.

4. Pay Off All Your Debt

You cannot save efficiently if you have considerable existing debt hanging over you like a sword. Just like how you start saving a little by little every month, do the same for your debt. The amount of debt you have determines how much you can save because you cannot completely ignore either of these items. Think of it this way – you need to pay off all your debt so that you can put the same amount of money towards growing your savings. So, if you’re bad with credit cards, control your spending. If you owe money to your friends, make it a point to clear it off at the earliest. And if you’re paying off a personal loan, ensure that you don’t default on your EMIs.

In Conclusion

It’s a common myth that you need to be earning at least a certain amount of money or more to be able to start saving. This couldn’t be farther from the truth. Even if you start with as little as ₹2,000 a month, it’s still a start. The idea is to focus on understanding how you spend your hard-earned money so that you can figure out how to save it in the best way possible.