Can never bring yourself to save? Here we try to help you get out of that rut. Read these four rules to get you started.
View expenses in percentage terms
Just because your buddy or colleague spends Rs 5,000 a month on entertainment, it does not mean this is the right amount for you as well.
Your friend may be earning Rs 20,000 a month. In that case, it would amount to 25% of his salary.
But, if you earn Rs 12,000 a month and spend the same amount, it would amount to a phenomenal 41% of your salary.
Look at all your expenses with reference to the amount you are earning.
View expenses from an annual viewpoint
Also, take an annual viewpoint.
Let's say you live in a metro and spend up to Rs 5,000 a month on wining and dining (especially if you have expensive tastes). But, if you look at it on an annual basis, it would amount to Rs Rs 60,000 per annum. Even if you spend just Rs 3,000 a month, it will amount to Rs 36,000 per annum.
Looking at it from an annual perspective does throw a different light on the issue.
View expenses as a flexible solution
Take a quick look at all your expenses. Some will be fixed (rent, monthly contribution to home, loan payments), others will vary but will be essentials (paying electricity bill, travel, cell phone bill).
You cannot cut down on the first category, so try the second.
Cell phone bill too high? Stop forwarding messages and cut down on pointless SMSes.
If you find your travel bills mounting, try compromising. On and off, deliberately bypass the taxi or autorickshaw and hop onto a bus or a train.
Try and take lifts from your family or a neighbour (even if it means reaching early) or maybe a colleague.
Form a travel group or maybe a car pool with your co-workers.
Spending too much on branded attire? Shop at sales or frequent factory outlets. Ensure you have one branded piece of clothing; the rest can be cheaper options to go with it. For instance, a pair of branded jeans will go well with a cheaper shirt or kurta.
Find yourself eating out often? If you can't cut down the number of times, ensure you don't order dessert and cut down on alcohol. This will benefit your health and wallet.
Or, convince your friends to have more pot-lucks (where you get together at home and everyone contributes one dish).
When you go for a movie, avoid snacking inside the theatre (everything is exorbitantly priced).
Don't be rigid, get flexible and innovative.
View savings as a spending category
Saving as spending? Quite an oxymoron isn't it?
Just as you have various categories of spending (rent, cell phone bill, eating out), add one more -- saving.
Go for an investment like a Systematic Investment Plan of a mutual fund. This will require you to put in fixed amounts every single month into a fund of your choice. This amount will be directly debited from your bank account.
Or, opt for a recurring deposit where a fixed amount gets deposited every month.
On the other hand, maybe, you could do both.
This way, some amount of money is automatically saved every month.
People normally associate saving with miserly behavior. It's not. It's just about hitting the right balance and making saving a habit.
