7 Hacks to Help You Get into the Habit of Saving More

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Introduction

Whether you want to purchase an insurance plan, invest systematically, take an international vacation or even buy your own dream home, there is one common starting point for all these dreams and goals. That point is the practice of saving money.

Every goal on your wishlist may cost you something, and to cross off each item on it, you need to have the budget for accommodating these expenses. But saving money - although it seems simple - can be quite a challenge to accomplish.

The key to successfully saving up the funds you need for your various goals is consistency. And a fair bit of discipline. There's no shortcut to help you cultivate the habit of saving more money each month. But fortunately, there are some hacks and tips that can help you get started and keep going.

That's just what we're going to be taking a look at in this article. But first, let's get down to the basics to understand why you need to save more money each month.

Why save more?

When your paycheck is credited to your account each month, it can be very tempting to use up all the money to meet your needs and fulfil your impulsive wishes. You may want to eat out at a fancy restaurant every other day, you may want to take a cab to work, or even buy those premium gadgets that you have been checking out for weeks.

While this definitely seems like a happy thought, it is not at all a smart idea to spend all your money carelessly. Here are the top 3 reasons you should save money.

  • You can be better prepared for emergencies

    There may be an unexpected medical emergency in your family. Or, due to an earthquake or a flood, your house may be in need of major repairs. In such scenarios, you need to have a stash of emergency funds that you can use for these contingencies. A savings plan can help you build such a fund.

  • You can let your money grow

    Investing can help you make money with your money. Depending on the kind of assets you invest in, you can earn exponential returns, thanks to the power of compounding. But to invest systematically, you first need to save money. This is another important reason to learn how to save money early on.

  • You can meet your major life goals effortlessly

    Lastly, you may have many major goals to accomplish in life, like building your own house, sending your children to college and saving up for retirement. If you don't save money carefully, you may end up spending most of your funds for minor needs and wants. This will leave you with little money for the major life goals.

7 money saving tips to help you get started

Now that you know why it is important to save money, let's take a look at how to save money right from the time you earn your first paycheck. Here are 7 such saving hacks to help you begin your journey.

  • Separate your needs from your wants

    One of the main reasons many people have trouble saving money is not the fact that they spend money, but the fact that they spend money on the wrong things. There are some expense heads that are essential. These are your non-discretionary spends, such as –

    • Your rent
    • Utility bills
    • Fuel
    • Loan EMIs
    • Taxes

    Then, there are those expenses that you can avoid, like that new piece of home decor you want to buy, or that movie you want to watch in the theatre this week. These are your discretionary spends - or your wants. Separate the needs from the wants, and ensure that you limit your non-essential expenses as much as you can. This way, you can save money consistently and without much trouble.

  • Pay yourself first

    Pay yourself first is a popular phrase in personal finance. But what does it actually mean? It is not about paying for your wants as soon as you get your paycheck. Simply put, it means pay your future self first. In other words, you need to set aside some funds each month - even as little as 5% or 10% of your salary - so you can save that sum for future uses. It means you have to redirect some money into your savings accounts or your investments today, so your future self is financially secure.

  • Use a budgeting rule

    This is one of the many money saving tips that can help you pay yourself first. Without a budgeting rule in place, you may not have a benchmark to follow when it comes to saving money. A budgeting rule can help you determine what percentage of your income goes towards your needs, your wants and your savings.

    For instance, there is the 50-30-20 rule, where you spend 50% of your income on your needs, 30% on your wants, and 20% on your savings. So, if you earn Rs. 1 lakh per month, this is how the money will be redirected –

    • Rs. 50,000 for your essential expenses
    • Rs. 30,000 for your wants and discretionary expenses
    • Rs. 20,000 right into your savings

    Another popular budgeting rule is the 20-4-10 car loan rule, which helps you specifically budget for the purchase of your new car. As per this rule, you need to pay 20% of the car's cost as down payment, take a 4-year loan, and spend up to 10% of monthly income on your loan EMIs.

  • Pay in cash instead of credit

    Credit cards are everywhere these days. It's extremely easy to apply for and get a credit card now, with every leading and upcoming bank offering a wide range of cards. Furthermore, there are also apps that allow you to make a purchase right away, and settle your bill within a month or a fortnight. In short, there are many forms of credit that are easily accessible nowadays.

    Because of this, it can become tough to track how much you are spending. When you use the buy-now-pay -later system, you tend to overspend, because the money is not immediately debited from your account. This, in turn, interferes with how much money you save.

    The easy alternative to avoid this issue is to pay via cash or debit cards, where the transaction is immediately reflected in your account balance. That way, you know exactly how much you can afford to spend.

  • Use a separate account for your savings

    If you save money in the same account that you use to spend money, things are going to get a little confusing. It is always a good idea to have a separate account for your expenses and a separate account for your savings. Ideally, it helps to have a savings account that is not linked to a debit card or a UPI account, so you aren't tempted to spend the money you have saved.

  • Automate your savings

    Another easy saving hack to ensure that you don't spend before you save is to automate your savings. Automation can help you redirect a specific portion of your paycheck directly to your savings account each month. So, for instance, if you earn Rs. 70,000 each month, you can set up an auto-debit mandate to move Rs. 20,000 to your savings account as soon as your salary is credited.

  • Buy a savings plan

    The last money saving hack on this list - but certainly not the least - involves buying a savings plan or an endowment plan. This won't just help you save some funds each month, but it will also help you protect your loved ones financially in the process. That's because a savings plan is a kind of life insurance plan that also gives you the benefit of a life cover. So, in case something untoward happens to you during the policy term, your loved ones have a financial safety net to fall back on.

    This kind of life insurance also includes a savings component, as its name suggests. The savings component is paid out as the maturity benefit at the end of the policy term, if you survive this period. You can then make use of this payout to meet your long-term life goals.

    A savings plan like the ABSLI Assured Income Plus helps you save money consistently and in a disciplined manner. The life cover acts as an added encouragement for you to save up for the future.

Conclusion

These money saving tips and hacks can help you get started with your savings journey right away. While it may not be possible to follow all these savings tips at one go, you can always start small and choose one or two hacks to incorporate into your regular financial routine. Then, month after month, you can pick up more savings habits and eventually have a solid savings plan in place.

ABSLI Assured Income Plus(UIN: 109N127V05) is a non-linked non-participating individual life insurance savings plan
ADV/5/22-23/252

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