Building better money habits ?
YOUR SALARY HAS BEEN CREDITED — isn’t this the best message we receive every month? Our mind starts wandering how we can put every penny to use as soon as our bank accounts get refilled. And more often than not, we are all guilty of overspending and exceeding our budget (Bet you can’t disagree on this!).
The ongoing pandemic has given us many opportunities to save money. A lot has changed around us lately. Owing to COVID-19, most places are shut, leaving us with minimal things to do, very few places to visit — less things to do means less things you spend your money on. For those with out-of-hand spending habits, this can be the perfect time to start building your savings. Reserved funds can give us choices when we feel like things are falling apart.
So, here is a question: What is the first thing you do when you receive your paycheck?
Do you spend it impulsively? Or do you build up your savings first?
If you fall in the first category, maybe it is time for you to reconsider your approach. The art of striking a balance between expenditure and savings is an essential skill to master, irrespective of your age. After all, your savings ensure financial security and provide a safety net in case of any emergency.
Here are some simple steps you can practice to ensure maximum savings on your monthly earnings.
Save for a rainy day- Put aside a chunk of money in your saving’s account to build an emergency fund. It doesn’t matter how much money you save, it’s all about building the habit.
Follow the 50-20-30 money mantra!- Up your personal finance game with this classic rule. Spend 50% of your salary on living expenses, the next 20% on travel, entertainment and food and the remaining 30% on compulsory savings.
Create a budget and swear by it- Make buckets for all your major and minor expenses — gas, electricity, rent, EMIs, yearly insurance and so on. Budgeting helps you gain control over your finances and prioritize your expenses.
Automate your savings- Saving is behavioural. If you lack self control, automate it. Under the automatic savings plan, instead of manually depositing funds every few weeks, you can fix a specified portion of your paycheck to be automatically deposited into a bank account on a periodic basis.
Define need vs wants- Do you really want the thing you’ve been eyeing for a while? Ponder over this! It may seem like a tough decision in the beginning, but consider downsizing on your wants if you think they’re taking over your budget.
Pay off high-interest debt- The amount paid as interest is lost money. It does not help you increase your wealth. So pay off your debt at the earliest.
Make use of expense tracker apps- Money tracker apps can help you monitor your spending trends. It keeps your expenses in check by reminding you to settle bills and avoid penalties thus reducing unnecessary hassles.
So starting this month, add some momentum to your money and take your personal finance game to the next level using these simple tips. Minimise your overspending to maximise your monetary wellbeing.
Do let us know how you plan your monthly expenses in the comment section below. 🙂