It’s human psychology that the more you earn, the more you feel like increasing your spending. Everyone likes raising their standard of living as they get promoted. But as soon as your ‘wants’ start transforming into your ‘needs,’ you’re due for a financial setback. And this can be a big challenge as you start distorting the line between saving money and spending, ultimately erasing the need to save.
So, if you’re struggling to save, don’t worry, we’re here with ways to save money, beginning with how much to save.
How Much of Your Salary Should You Save Each Month?
So, exactly how much to save each month? Your salary plays a huge role in determining how much you will save. A general rule of thumb to follow when finding ways to save money is to start rationalising your salary.
Ideally, according to the 50-30-20 income rule, 50% of your salary should go towards necessary living expenses, 30% of it should cater to all your lifestyle expenses, and 20% of it should be devoted to savings. But this rule is subjective to everyone’s personal needs. For example, if your goal is to get a house by the end of the year, you will need enough money for its down payment, and by saving only 20% of your salary every month, you won’t be able to reach your goal quickly. So, you should save according to your long and short-term financial goals.
If you minimise the 30% of lifestyle expenses by reducing unnecessary expenses, you can devote more to savings. You can even trim the 50% living expense criteria by searching for cheaper alternatives. You can also take an instant salary advance loan if you are in a cash crunch situation. It helps with money while keeping you from falling into debt.
How to Start Saving Money by Cutting Down Monthly Expenses
Reduce Your Energy Bills
Every electronic item that’s plugged will consume a significant amount of energy, causing your energy bills to spike. But today, there are cheaper alternatives to expensive gadgets as a way to save money. For example, a CFL bulb is more energy-efficient than normal lightbulbs. So, you can replace 60-watt regular bulbs with 14-watt CFL bulbs to save on electricity.
Additionally, use electrical devices gingerly. Unplug all unused devices like the laptop or mobile battery charger. This can help in the long run, resulting in big savings.
Save Some on Food
Food expenses are known to constitute a majority of your monthly expenses. And it significantly disrupts your monthly budget. Here’s how to save money each month on food:
- Avoid eating out: The best way to save money is to reduce or avoid eating out as much as possible. Save the best restaurants for special occasions and try to cook food at home. Consider dining out as a luxury instead of a convenience.
- Pack your lunch for work: Try preparing your lunch in the evening before to save time in the morning. It can be a task, but it’ll be worth it once you see how much you save.
Cancel Unused Subscriptions
When was the last time you used that Netflix subscription you’re paying a significant amount for? Or did you use your Hotstar membership after IPL? If not, then it’s time to cancel these them. Cancel all the subscriptions that you’re not using. You can instead transfer this money to your savings account.
Minimise Unnecessary Purchases
Another way to save money is by reducing unnecessary expenses like impulsive shopping. Think about it, is it really necessary to watch a movie in the theatre every weekend, go to a fancy restaurant, or spend on shopping every month? These are luxuries, and overindulging in them can cause a hole in your wallet. Try to keep these expenses minimal.
Save Bonuses
While it’s a natural instinct to spend whatever performance bonus or increment you receive at work out of happiness, don’t get impulsive in your decision. Think about the long term. Today, you may be tempted to reward yourself, but if you save that extra money, you can reach your goals faster.
Repay Debt on Time
Taking loans is no one’s dream. No one wants to spend a major chunk of their salaries repaying EMIs and credit card bills, but sometimes loans are the only option to fund your purchases. So, if you’re currently in debt, one way to save money in this situation is by paying it off regularly to avoid late penalties and harming your saving potential.
Avoid Falling into a Debt Trap
Debt traps can be the most financially draining stress. Hence, avoiding falling into one is essential to save money each month. Don’t take additional loans if you already have an existing one ongoing. Also, avoid loans unless you need them.
How to Manage Expenses with Kids?
Managing expenses with kids require careful planning and a balanced approach. Start by creating a comprehensive monthly budget that includes all essential categories such as groceries, education, healthcare, clothing, and leisure activities. Involve your kids in age-appropriate discussions about money to instill a sense of responsibility and value.
Prioritize needs over wants, teaching them the difference between necessary expenditures and discretionary spending. Look for cost-effective alternatives when possible, like buying second-hand items or taking advantage of discounts and sales.
Regularly review and adjust your budget as your children’s needs evolve. Encourage saving by introducing them to the concept of allowances and setting up savings accounts. Openly communicate about financial goals and limitations as a family, fostering a sense of teamwork and understanding.
By setting a positive example, involving kids in financial decisions, and maintaining open communication, you can effectively manage expenses while imparting valuable money management skills to your children.
Bottom Line
There are several ways to save money that ensure you can reach your financial goals on time. You simply need to develop financial discipline to ensure you don’t spend every penny of your salary. Once you develop the habit of saving, a great job with a high salary is actually worth it!
