7 steps you should take to improve your savings

At a time when
inflation is still hovering above the comfort zone and economic growth
has slipped to new lows, it only makes sense for the general public to
spend its money judiciously.

Here’s how you can boost your savings rate:
  1. Avoid excessive use of plastic money: We often find instant
    gratification while buying things we love and regret later while paying
    our credit card bills. In order to develop the habit of saving, start
    paying bills by cash. Try to reduce or nullify the usage of credit
    cards.
  2. Avoid impulsive shopping: Make a list before going for shopping, and
    stick to it. Avoid making any irrational decisions while making any
    purchases. Don’t get lured by the deals and end up buying things that
    are not a necessity.
  3. Start small, save big: Don’t postpone making investments till a
    substantial amount is accumulated. Start making investments even in
    smaller amounts. Pick an SIP based on your risk profile and make
    payments towards them even if one has a monthly surplus of Rs. 500. The sooner one starts, the greater the benefits of the power of compounding.
  4. Postpone spending, not saving: The best way to make sure that we don’t
    spend in excess is to transfer our money to savings during first few
    days of the month. This ensures that we know the exact amount we are
    left with to maintain our monthly expenses. Stick to the monthly saving
    routine. Postpone any major non-committed expenses, but not the monthly
    committed savings.
  5. Stick to the monthly budget: Make a list of monthly expenses. Set the
    target amount to be saved. Distribute the remaining amount under
    different monthly expense heads. Stick to the plans being made. If one
    of the expenses exceeds the limit, make the provision by cutting down an
    expense. Don’t accommodate additional expenses from the savings. Never
    fund an expense with the savings.
  6. Try to reduce one expense per month: Find that one expense you can cut
    back on. For example, if you have tea from outside thrice a day, bring
    it down to once or twice. Packing a meal for work can also be an option.
    Though you will save just Rs. 20-30 extra each day, it will add up to Rs. 600-900 at the end of the month, which can be used to improve monthly savings.
  7. Continuously monitor and assess your savings: Monitor your budgets and
    make sure that savings are always at the optimal levels. Whenever there
    is a change in the financial situation, revise the budget. Savings
    should take the top priority before designing a new budget. This helps
    in maintaining a healthy fund to counter unnecessary debts during
    emergencies as well.

Nitin Vyakaranam is the founder and chief executive officer, ArthaYantra, an integrated online personal finance company.

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