For many of us saving money doesn’t come naturally, especially for those of us who are spendthrifts and undisciplined. However, saving money on a tight budget is not only possible, but it’s vital to lead a healthy and a rewarding life. Many experts advise that our minimum savings goal should be close to three-to-six months of living expenses. While saving money might not be easy, developing strong money management skills can help you live a comfortable life in the future.
Here are some simple tips to save money on a tight budget:
- Set, Stick to and Save A Budget: Refer to it as the triple ‘S’. Savings can be for several reasons, be it buying a house or a car or can be for a long-term goal related to retirement and planning for health-related expenses. When there’s a goal in mind, whatever may be the reason, it works. Once you’ve set the budget, the next step is to create a practical and realistic budget. Often the rule of saving is quoted as 50/30/20. By allocating 50% of your income for essential expenses such as food and rent, while 30% should be allocated towards lifestyle expenses. The remaining 20% of your income should be kept aside for servicing your debts, if any, and most importantly savings.
- Reducing Your Monthly Bills and Expenses: Always review your bills towards subscriptions such as cable TV, newspaper as well as cost towards mobile recharges, internet, eating out, etc. Service providers offer various new packages to beat the competition. Look for the best plans when it comes to mobile recharges, internet subscription, cable tv recharges, etc. Try Money Saving Pro’s calculator to see how much you can save! This way you cut down on unwanted expenses which do not add value to your hard-earned money. Avoid eating out as much as possible as this invariably is expensive compared to eating at home. If you’re looking to buy a car, purchase a car which returns excellent mileage as this will leave you with extra cash towards the end of the month.
- Take Advantage Of Financial Apps: Technology is is affordable and available to all. There are several financial apps that can help you stay disciplined with your personal finance. For example, the BankBazaar app, which can be downloaded from Google Play Store as well as from Apple App Store, can help you prioritise your expenses, earnings, and savings. The BankBazaar App lets you check your bank balances for multiple accounts and helps you track all your expenses. Also, the app lets you understand the expenses incurred on your credit card and any EMIs.
- Make Smarter Decisions On Your Monthly Shopping: Make a list of essentials for the month and stick to the list, this way it encourages you to buy only what’s required and not more. Evaluate online purchases for offers such as cashback, month-end discounts, and clearance sales, this will avoid unnecessary expenses. Don’t just stop there, put the difference between the amount you usually pay and the amount you have saved into a saving account, even if it’s a small amount. Take note, “A penny saved is a penny earned”.
- Start Investing and Diversifying Your Money: Traditional method of investment has always been either on fixed deposits or LIC policies, while a modern approach is to invest in mutual funds, despite their risky nature. Both the approach are excellent, but diversifying them into fixed deposits, government bonds, mutual funds, equity market, Equity-linked Saving Scheme (ELSS), and Public Provident Fund (PPF) will help you to balance between risky and safe investment instruments.
- Stay Committed And Evaluate Your Progress: Several experts suggest you keep aside 20% of your income towards savings, but that could be challenging. Often many set aside an ambitious target of savings level. There could be unexpected expenses which could discourage you from saving. For example, expenses on unexpected health issues or probably your house might require a small repair, these tend to eat into your earnings. But if you manage the major expenses and continue to save that 20% or 10% of your income, you’ll be equipped to handle any future unexpected expenses. Keep a regular check on your progress. To be on track with your budget, set a day and time to evaluate your transactions over the week, probably every Sunday. In case your expenses have gone beyond your target, don’t give up. Push yourself and get back on track.
In conclusion, make a realistic and simple budget which you can keep. Keep a track and evaluate your progress every week, this way you won’t lose track of your ultimate goal of living comfortably when you retire. Most of all, when you start achieving your savings goal, reward yourself and celebrate with a bit of your savings. Balance is the key, by treating yourself over hitting a savings goal will encourage you to save more money on a tight budget.