Saving money has always been a daunting task and most of us fail miserably at it. One can relate more to this after seeing the average savings contribution. Lavish vacation or a fancy car can always distract us from our long-term goal of owning a home. It was easier in the earlier times when the life expectancy was lower and there was no need to plan for the long term. But now with increasing life expectancy and rise in the nuclear family culture, it has become more important for us to save for ourselves rather than depending on our Children or the Government.
When it comes to money management, it is indeed difficult to infuse the savings habit if we are a firm believer of You Live Only Once ideology. Nevertheless, savings is important even if your mind stays more on spending rather than putting the money away for your goals. But as they say there is a solution to every problem. All you have to do is to trick your mind into savings. Here are a few tricks to nudge yourself towards the savings.
1. Automation is the key
Automatic enrolment is a great way to ensure that your money is getting saved without you realizing it. Your Provident Fund is one of the ways where the money goes out of your salary without you feeling the pinch. Even many banks allow the auto-debit facility for your investment plans like Mutual Fund SIPs or NPS. Once you set your accounts on auto-transfer, you will not be tempted to spend the money somewhere else as it won’t stay in your account.
2. Increase your savings every year
You can synchronize your salary hike and the increase in your savings. Every time you get a salary hike, increase your savings rate by a set percentage. This way you will not feel the pinch of your salary going down and this method will also help in improving your savings rate. You can apply the same technique with your annual bonus. Save some percentage and use the rest for your immediate requirements.
3. Continue with your loans
You have recently cleared off one of your loans. You can still pretend that it exists and continue keeping that money aside in savings even if the loan account has closed. This way you will not spend the money and you can use it for any of your goals in the future.
4. Divide your savings account
If you cannot see money lying in your bank account and get a strong urge to spend it every time you check your account balance, it would be prudent to create 2-3 different buckets of your financial goals and stack the money there. You can divide your investment buckets and name them as per your goals be it an emergency fund, retirement bucket, or education bucket. Linking and categorizing the savings as per our goals helps us recognize the importance of the savings we have done and it also refrains us from spending it somewhere else.
5. Wait before making an impulsive purchase
There is a very thin line between needs and wants and we often choose the latter when it comes to shopping. We get very attracted to impulsive buying and the result is not so very good for our savings. Whenever you get an urge to buy something that is unplanned, give yourself some time before making that immediate purchase. Giving a pause before the purchase helps you get over the immediate urge to buy that thing and will also give you time to think thoroughly if that item is actually needed or not.
Saving money should not be that difficult. Using these techniques for saving money will make your financial life more planned and will also help you reach your financial goals quicker.
Charu Hastir, CFPCM is the founder of http://www.theriteplan.com/. Rite plan is an online financial planning portal created to achieve a single objective of providing easy and Do It Yourself Financial Planning to netizens. Rite Plan is wholly owned by Tikkun Olam Financial Planning Services LLP. Please visit: https://theriteplan.com/index.php?route=common/home/
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