7 Simple ways to control spending and start saving money
Everyone among us wants to invest money. Whether you are a fresher out of college, someone who has just got married, new parents, someone in 40s heading towards retirement – each one of us want to save and invest for our future.
The biggest challenge for us is to find out money which we can invest. You may be a graduate from one of the ace universities earning a fat pay package or working as a senior manager with some MNC – but when you look at the savings and investments you have – less said is better. The common excuse is “I don’t have sufficient money to invest”
People, especially young people finds it difficult to save and invest in the initial years of their professional life. Discretionary expenses are quite high among the youth. In one single outing, huge expenses on food and lifestyle is common among youngsters. Gen Y is more focussed on EMIs instead of SIPs. They love to indulge in buying gadgets and newest cars but they don’t have money to save and invest. Most of the youth have same story to tell. They have lavish lifestyle but when asked about savings / investments, they always come up with a sorry face.
Investments require a lot of disciplined approach and this discipline is the only mantra to make your investment strategy a successful one. Below is the list of 7 mantras that can make you control your spending and help you save money for investments.
Save before you spend or Pay yourself first : The common approach towards investment is save whatever is left after all expenses. This way most of the people can not save as they don’t have any leftover money by the end of month. They spend their entire income month on month and are left with no surplus money for savings and investments. The best way to tackle this is set aside a sum – say 25% or 20% of your income and at the beginning of the month and invest it via SIP or recurring deposit so that it’s not within your easy reach. Learn to live on 80% of your salary. This will ensure that you are never short of money for investment.
Avoid using credit cards and don’t save your credit card information on shopping sites : It has been proved by many researchers that one tend to spend more if he uses credit card or the payment information is saved in online shopping websites. Always buy things with cash. Also when you go to shopping mall, don’t carry your credit / debit cards. Carry cash instead as you can understand the impact of your purchase when you see actual money going out of your pocket. Remember – Overspending is the biggest block in financial freedom
Wait before you buy something expensive: When you are fascinated by the new LED TV during the weekend outing at shopping mall – Don’t buy it immediately. Wait for 30 days. If the same urge is there after 30 days, buy the item in cash. Continue this practice with every expensive item you intend to purchase – be it TV, Car, refrigerator, AC etc
Avoid peer pressure for spending: You don’t need to go out every evening for a coffee when all your team members go. Once in awhile it is fine but there is no need to have it everyday. Same way no need to go out for a drink to the exclusive (“expensive”) pubs every weekend to chill out with friends. It’s perfectly alright not to indulge in theses practices. Remember these practices are big money drain. We have seen earlier how not to succumb to peer pressure
Start investing in small amounts without any excuse: Whatever little money you have saved, start investing in Mutual funds/stocks/recurring deposits without making any fuss. If you keep thinking that you don’t have enough money for investments, things will never improve. You must start with whatever little you have and keep growing your portfolio gradually but steadily. Start goal based investing which can simplify your investment strategy. We have seen earlier – Do not delay investing as it can cost you dearly
STOP using window shopping as a de-stressing tool : Using window shopping as an excuse to de-stress can harm you in the long run. Buying / gathering stuff without any objective can drain your money like anything. It also puts you under undue stress as you keep looking for deals on anything and everything which you don’t need. Always advisable to make shopping need based with a list in hand when you go out to buy something. This will keep your life as well as home clutter free and free up a lot of investable surplus money. We have seen how supermarkets are a big trap earlier and how to avoid impulsive buying
BUDGET- BUDGET – BUDGET : There is no way around the exercise called BUDGET. Don’t buy any WANT items if it’s not budgeted for. Keeping track of expenses also keep your expenses in check as the figures will give you a real picture. When you start budgeting and writing your expenses, you will free up a lot of GHOST money which usually gets disappeared in your window shopping and unplanned entertainment. This link will help you on how to start budgeting
If you stick to these practical 7 mantras, you will find yourself saving and investing regularly for your future. Remember, it’s your own money and none other than you can take care of it in a better way.
Happy Investing !!!