Saving money does not mean losing everything you love! A realistic money saving plan has to factor in your current needs and lifestyle so that you can enjoy your hard-earned money.
Many money savings plan fail because people set unrealistic goals for themselves and eventually find themselves unable to follow them.
Below, we’ve listed some tips to help you design a money saving plan that you’ll be able to stick with for your entire life.
Table of Contents
Know Your Monthly Budget
Before beginning your savings journey, you need to understand your income and expenditure. You should track your expenses for a month and see exactly what you’re spending your money on. It’s important to cut down expenses that are unnecessary to you, but you shouldn’t stop spending on the things that bring you joy! You’ll have a good idea of where your money goes after you track it for a month. For instance, you may find that the money you spend on online food ordering services adds up to quite an amount. You can then decide how much you want to spend on these services.
Set a Monthly Saving Target Realistically
Don’t set your eyes on an extremely high target. If your income is, say, ₹ 50,000, it wouldn’t be wise to save ₹ 20,000 every month. If you’re earning just enough to get by, saving a hefty sum every month would leave you broke and unable to pay your regular bills. It’s best to set a target that’s realistic to your lifestyle. Even if it’s a small amount, regular savings can add up over a period of time. You can always raise your target if you earn more or if you cut down some unnecessary expenses.
Save Right Away After Getting Your Salary
You can automate your savings and make it a habit instead of worrying about it every month. A good way to do this would be to save a certain amount of money right after getting your salary and then using the rest for your regular expenses.
Having this habit will prevent you from spending your hard-earned money on things you don’t really need or want
If your income comes on a particular day every month, you can automatically transfer a certain amount of money to your savings account every month on that particular day.
Keep Some Money for Your Personal Needs and Lifestyle
A realistic money saving plan will help you save money without taking away everything you love. Make sure you leave some room for personal expenses that make you happy. The amount can vary depending on your income and other expenses. You could leave around ₹ 4,000 aside for personal expenses if you’re earning around ₹ 15,000. Having this particular amount for yourself will give you an incentive to save more money, as you know that you’re saving for something specific. You can spend this money on food, shopping, entertainment, vacations, or anything you like! It’s important to keep your finances healthy without compromising on your lifestyle.
Set Your Personal Needs and Lifestyle Apart From Your Wants
You can’t cut down on all your wants and needs. It helps to distinguish your personal needs and lifestyle from your wants.
You can keep your wants on the back burner until you’ve fulfilled all your personal needs and lifestyle needs. For example, rent, groceries, school fees, electricity, and transport are some of your personal needs. Shopping, eating out, and entertainment are some of your wants. It may help to cut down on your wants when you have less money than usual and save more money for later.
Save Up for Emergencies
Emergencies may come anytime and ruin your entire money saving plan if you’re not prepared. You can set aside some money for unforeseen circumstances such as medical expenses and car repairs.
If you have very little money, you can begin by setting aside a small amount for emergencies. You can then raise this amount every year until it reaches a certain amount that’ll help you tide over any financial crisis.
Divide Your Savings Into Different Categories
You can have different targets for different savings goals. For example, you can save some money for short-term goals and some money for long-term goals. You can also save money for specific purposes such as an emergency fund or a vacation fund.
You don’t need several bank accounts for this. You can have multiple targets in one single bank account. It helps to set aside money for specific reasons so that you know exactly why you’re saving money.
Cut Down On Unnecessary Expenses
It’s crucial to cut down on expenses that are unnecessary to you so that you can save more money. You can look for ways to reduce your expenses. You can compare prices and buy a cheaper mobile network plan or cancel subscriptions to applications and websites you hardly ever use. You can also look for ways to save money on transport, groceries, and food. It’s important not to compromise on things that are really important to you. You can also set a personal limit for online shopping or eating out. If your expenses are quite high, you can look for ways to bring them down. The idea is to save money without breaking your head trying to figure out how to make ends meet every month.
Think Twice Before Buying Things
It’s tempting to buy things whenever you see them, especially if they’re cheap. However, multiple small purchases can tally up to a pretty significant amount. You can set aside a certain amount for shopping every month and stick to it. You can always buy more things the following month. It’s important to think twice and thrice before buying small things, as they can add up and deplete your savings. The habit of impulse buying can also get you into debt. A good way to avoid this would be to tell yourself that if you still want to buy a thing after a day or two, you can then go ahead and buy it. It’s also important to not compromise on the things you really want and need.
Review Your Progress Every Month and Set New Targets
Your income and lifestyle will change throughout the years, and, therefore, your money saving plan should change too. You should review your money saving plan every month and see if your targets are realistic. If you have extra money that you’re not spending on anything in particular, you can raise your target by a certain percentage instead of saving more money on the same amount every month. If you’re spending a large amount on your personal expenses every month, you should lower your saving target and set a new target for the following year. A good and realistic money saving plan should change and evolve with you.
Raise Your Saving Targets If Your Income Raises
If your income raises, it doesn’t mean that your lifestyle needs to change completely. You can use a percentage of the extra income you earn to raise your saving target. For example, if your monthly income raises by ₹ 5,000, you can save an extra ₹ 3,000 every month and spend ₹ 2,000 more on your lifestyle. This way, you can treat yourself to a better lifestyle while also raising your saving target.
Be Consistent With Your Saving Plan
It’s important to be consistent with your money saving plan so that you can enjoy the fruits of your savings later in life. You can begin by saving just ₹ 500 every month. The whole point of a money saving plan is to make saving money easier. If you’ve set aside ₹ 2,500 for your lifestyle needs and you’re having a pretty good month, you can save the extra money. You can also lower your saving target if you have some extra personal expenses this month. A consistent saving plan is the only way to a financially stable future. You should always have a saving plan that’s realistic to your lifestyle.
