What do you do when you get your salary?
Do you have any plan to save money?
We have found that the average salaried person never saves money. They always borrowed money whenever they needed money.
The habit of saving money is very important. The money you save today will help you tomorrow.
7 simple step to save your money
1. Open recurring account
Open a recurring account with your bank. I will help you to save a definite amount of money every month.
Put some portion of your money into this account. It will not less than 10% of your salary amount.
It is an automatic way to save your money.
It sounds easy to you, but trust me it is the hardest step you will tackle.
It takes discipline to save money in the first places especially when you have bills to pay.
Your instant gratification will never let you save money.
It is a lot easier to save money when you don’t see your money in the first place.
You can open recurring account with you saving bank account.
If you use internet banking or mobile banking you can open recurring account on your own.
2. Cut unnecessary expenses
I am not saying about your necessary expenses, I am saying about your luxury expenses.
Don’t buy an unnecessary thing just because you can afford to buy it.
You can control your expanse just by keeping tracking your money coming out of your pocket.
3. Have money goals
Make your savings goals.
You can divide your savings goal into two categories. Your short term goal and long-term goal.
Short term goals are:
- To buy a laptop
- To buy a car
- Emergency fund
Long term goals are
- Home mortgages
- You children education
- Your retirement
According to your savings goals, you can put your money in different places. For short-term goals put your money in a safer place such as saving accounts or fixed deposits.
For the long-term goal put your money in some investment vehicles such as a stock, bond, or real estate, mutual fund, etc.
4. Avoid debt
Pay off your credit cards every month to keep your debt from piling up. If possible, avoid going into debt in the first place by spending within your limits.
Don’t buy anything if you can’t afford to buy it.
Get rid of debt as soon as possible. You can’t grow financially if you have heavy debt on yourself.
5. Create a budget
Budgeting means itemizing your income and expenses over a period of time.
Keep records of how much money you have and where you are spending.
Allocate your portion of your money for your different expenses.
Every time you make a purchase write down your expenses.
6. Invest in SIP
SIP is a systematic investment plan in which allows you to invest a fixed amount of money in a mutual fund.
In India, an average mutual find can give you return between 12 to 15% .
It is always beneficial to invest your money because money invested will give you a compounded rate of return.
And when compound works you little amount saved every month gives you much higher return over a period of time.
In SIP you can invest with an amount as low as Rs 500.
To open an SIP you can contact any mutual fund
Various mutual funds in India are
- SBI mutual fund
- HDFC mutual fund
- UTI mutual fund
- Kotak mutual fund
- Axis mutual fund
- Motilal Oswal mutual fund and many more ….
There are many different types of funds in every mutual fund so always check their track record before investing in them.
7. Save for emergency fund
The emergency fund will act as a safety net for you. The emergency fund you have can help you in unexpected situations.
Emergencies can be anything like health emergencies, job loss, accidents etc.
You should always be prepared for such situations. Do not rely on your employer to take care of you.
You should save at least 6 months of expenses in your emergency fund.
Saving money is very important for everybody. We should always have money for our different needs and emergencies. Never put yourself in a heavy debt position. If you have debt get rid of it as soon as possible.