Sure ways to save money, improve finance

| Filed under: Personal Finance | Author: Editor

If you are also among those who usually find it hard to save, there are some innovative and sure-shot ways which can help you save more and also improve your financial health.

One of the quickest ways to improve your finances is to reduce your spending and find more ways to save money. Unfortunately, there are still many people around who find it difficult to save, most of the times putting the blame on their ‘insufficient’ income. This is, however, not true as various studies have already proved that how much you save has little to do with how much you make.

If you are also among those who usually find it hard to save, there are some innovative and sure-shot ways which can help you save more and also improve your financial health in line with your goals.

Here we take a look at some of them:

• Stick to the budget: One of the surest ways to cut your spending and save more is sticking to the monthly budget and resorting to forced savings. This system always works, regardless of the kind of job you have or your income.

Giving an example, Lovaii Navlakhi, MD & chief financial planner, International Money Matters Pvt Ltd, says that he knows of a client who segregates her monthly expenses in envelopes, for example, for groceries, eating out, fuel costs for two wheelers, etc. If the family decides to go out at the end of the month, the venue is dependent on what amount is left in the ‘eating out’ envelope. Similarly, the children may resort to travelling by bus if the ‘fuel costs’ have run out. This way they are able to budget their expenses and save as per their goals.

• Take a ‘no buy’ day or week:Another important way to help with saving money and keeping a quality budget is ‘spending freezes’. This means for the entire time of the ‘no buy’ break, you aren’t allowed to buy anything new, or to go shopping. Exceptions to the ‘no buy’ time might include paying for medicines, food and emergencies that come up like a car breaking down. “Save the money you would have normally spent during the day or week you are on the ‘no buy’ break and invest that amount by the end of the month,” says Navlakhi.

• Avoid buying on impulse: Do you often purchase something and then get it home to find you aren’t excited about it any longer? It happens with most of us. Therefore, if you are in the habit of spending on impulse, make an effort to have a moment of reflection before buying anything. “If you see something you would like to buy, try waiting a day or two before actually committing yourself to buying. If you really want it, you will come back. This will not only help you save more money, but also give you the chance to find other things that may be better,” says Atul Surana, certified financial planner and MD of Mangalore-based Catalyst Financial Planning.

• Avoid spending by habit: Quite often a lot of our spending is a daily habit. However, this spending could easily be unnecessary. For example, if you buy a takeaway coffee everyday for your office staff / visitors, why not invest in a coffee machine? “Just because you spend N500 a day on lunch, doesn’t mean this habit has to continue forever. Try taking your own lunch. Re-evaluate all your habitualspending patterns and decide whether it is necessary. This will help you cut your unnecessary spending and save more.

Should you worry about spending after meeting goals?

Blame it on the uncertainties in the economy and its impact on individual careers and finances, more and more people are taking their financial affairs quite seriously.

There is a favourite story used by a financial planner to bring home the point that many individuals have become extremely serious about their financial planning.

While making the presentation, the financial planner would narrate the story about a young company executive who called him up late one night to check whether his spending habits need a closer look. His question was not simple. The young man saves and invests around 55 per cent (anything over 50 per cent is considered excellent) of his income every month.

However, lately, he started noticing that most of the money he spent every month was only on dining out. Is that okay? That was the question. The financial planner refuses to discuss the details, citing confidentiality.

Most probably, the young executive was worried about his health. However, the question really merits a closer look in our anxiety-prone lives.

Should you be bothered about how you spend even after meeting your monthlysavings and investment targets? “Such thoughts may be mostly because one is feeling guilty or is not comfortable about certain spending habits. It is a red flag, and you should examine the issue seriously,” says Gaurav Mashruwala, acertified financial planner.

“Also, it is always important to cut down on unwanted expenditure. You should always remember that it is always better to save and invest more because your income need not keep growing at the same pace in the future.” Suresh Sadagopan, principal planner at Ladder7 Financial Advisories, says as a planner he normally doesn’t tell his clients how to live their life.

“We help them by drawing up a plan to meet their various goals, and normally don’t concern ourselves how they are leading their life.  But if we come across an instance where someone is spending too much money without a valid reason, we may be curious to know why it is happening,” he says.

 Culled from EconomicTimes.