Salary day is undoubtedly the most awaited day of the month.
Every month you decide that you will save as much as you can by avoiding unnecessary expenses. However, it becomes difficult to prevent certain unpredictable expenses and you are often left with little to no savings by month-end.
We’ve all been there.
Savings are a basic yet crucial part of financial management. Without adequate savings, it is tough to take care of your needs and fulfill your financial responsibilities. So, in order to develop a disciplined approach towards financial management by inculcating the habit of saving, we have listed below five financial planning strategies to help you save sufficient money for a rainy day and also help you achieve your goals faster.
Make a note of your expenses:
Even if you may not have incurred any huge expenses in a month or year, there are plenty of small purchases that quickly reduce your savings without even coming to your notice. This is why finance experts often give huge importance to budgeting. Because, when you pay attention and keep track of all your expenses, you will be able to determine various ways in which you can cut down on unnecessary purchases.
This way you can prioritize your needs above wants and avoid spending on non-essential things. A popular method for budgeting is the 50-20-30 rule in which you need to divide your after-tax income into 3 parts.
- 50% of your income to be used for unavoidable essentials and needs
- 30% of your income to be used for avoidable wants
- 20% of your income to be used for savings and debt repayments
Do not let your debt accumulate:
Debt is the biggest enemy of your portfolio. Once you fall into the debt trap, it becomes difficult for you to keep up with your financial goals. Additionally, if you let your debt accumulate, you will end up paying a higher interest amount. So, the ideal way out is to prioritize your debt repayment plan and make sure that your monthly EMI does not exceed 40% of your monthly income.
Paying off your debts faster will take away your burden and help you start saving for your future. Moreover, if you delay your loan repayment, it will affect your credit score. And with a bad credit score, you won’t be able to enjoy certain benefits such as faster loan approvals, higher credit limits, lower interest rates, etc.,
So, always try to maintain a credit score of at least 750 or above.
Keep an eye out for genuine discounts, and offers:
Discounts are another great way to help you save a little extra money. However, sellers often increase their prices right before they announce a sale. So, if you are looking to purchase items such as home appliances, electronics, furniture, etc., you need to compare all the product prices available in the market and find out the right value of a product. This will help you to identify if any discount offer is genuine or not. Thus, you can avoid spending more money on a product that is available at a lower price or has a better alternative. Similarly, it will help you keep an eye out for coupon codes and cash-back offers.
Tax saving investments:
By planning your taxes in advance, you can make the right tax-saving investments and ensure maximum savings. With these investments, you will save on taxes, as well as generate higher profits. You can choose from various tax saving investment options such as Equity Linked Savings Scheme (ELSS), National Pension Scheme (NPS), Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), National Savings Certificate (NSC), etc.
Consult a financial advisor for the right investment guidance:
Even though you may reduce your expenses and implement several methods to save money, you still need to have enough funds to beat inflation. Consulting a financial advisor will not only help you make the right investment choices based on your goals, risk tolerance, and preferences but also help you formulate better financial strategies that will generate inflation-adjusted returns. This will increase your savings and help you achieve your goals faster.
Conclusion
These common and beneficial methods can boost your savings by helping you control your expenses and invest wisely. Having said that, these are just a few ways that can add value to your portfolio. You can always seek expert guidance and expand your financial horizon based on the latest market trends backed by extensive market research.
Disclaimer: The views expressed in the blog are purely based on our research and personal opinion. Although we do not condone misinformation, we do not intend to be regarded as a source of advice or guarantee. Kindly consult an expert before making any decision based on the insights we have provided.