Now that you are earning, you want to ensure you live a comfortable life without wondering how will you cover your expenses. Irrespective of the money you earn, there will always be scope for savings. It all depends on what is your current lifestyle and the lifestyle you are aiming for.
Be smart and make a habit to save money because the paycheck might not look the same at the end of the month. We bring you some simple advice from wise money managers so that you never have to hate looking at your account balance ever again.
Begin Your Month With A Budget
Budgeting your expenses at the beginning of the month may seem like a futile task but it will prevent you from running out of money, bang in the middle of the month. Set aside your income in portions you may need for food and daily expenses. Now what is left can be divided into two parts – one for your goals – it could be travel savings, college savings or your dream car. Another part is for contingencies – unforeseen events in life like losing your job or emergency plane tickets.
Make The Most Of Your Budget
Before you set aside money for daily expenses, note down all the expenses which you usually make during a normal month. Food, transport, electricity, medicines, recreational and anything that is individual to you. You cannot make a blind budget as it will only lead to withdrawing from your savings amount. You must plan your budget in such a way that you are able to live comfortably.
Restrain Yourself From Impulsive Spending
Man is a creature of habit. Budgeting and savings have to be cultivated over a period of time. You must strive to stick to the budget you have made. Do not give in to the instant gratification affected by the capitalist economy. You may be tempted to make a lot of unnecessary purchases but remember, there is no end to the fashion or accessories you can purchase. There will never be a last one. Spend smart, think of the value that object adds to your life. Small expenses made regularly can drain your bank account. Similarly, small savings can compound into big amounts over a period.
Watch What Flies With Your Money
Ordering in every day, coffee runs, one drink per evening are avoidable expenses and you know this too. Instead, add up this amount for a month and you will be surprised how you can eliminate expenses from your daily budget. Add this to your travel amount and you could probably purchase an airplane ticket in the amount of coffee you would have consumed in that month. You can list down your daily spending places and strike anything which you can do for a much cheaper amount.
Avoid Unnecessary Debts
EMIs are a trap. If you cannot afford it right now, that means you should not burden your future self into debt. The banks may see your credit score and offer you a loan on a car or an iPhone because they get a commission from companies to do so. You know your existing debt obligations and your future goals. You should not purchase anything which your total yearly income cannot sustain. This is a vicious cycle of perenially living in debt. It robs you of your freedom to follow your passion. You may not be happy with your job at some time but you will have to stick to it just because you have loans to pay off.
Check Your Investment Options
From gold to stock markets to property, whatever is your investing bracket, you must do a thorough research of the type of risk you can afford. All investments are subject to market risks. Please read the offer document before investing. These lines are disclaimers from financial institutions to shrug off risk responsibilities. It is your job to see where your money is parked. Quick returns come attached with big risks. Read trends of the last few decades of the returns a certain investment offers from other sources. This will give you an impartial view of how much you should put into that particular field. Read up on smart wealth management and sound insurance planning.
Budget For Milestone Events
As we stated earlier, budgeting for your wishlist will take you a step closer to actually owning it. There are a few occasions and events which you are going to remember as milestones of your life. Save up for those times when you will want nothing but the best for yourself and your loved ones. A holiday with the family or something big which you want to gift your mother. These are the times when happiness is bigger than the amount it cost you
There is a 70:20:10 rule which says that 70% of your income should be your living expenses, 20% your savings and 10% must be used to pay off any debts or loans you may have. The ones who do not require loans may sometimes donate this percentage of income (for part philanthropy part tax concessions). We hope with the above strategies you will be able to breeze through the month and be proud of yourself by the time you receive your next paycheck.