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.
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
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.
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.
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
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.
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.
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.
Disclaimer: The opinions expressed in this article are the personal
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