Once a person starts doing a job, one of the major problems he/she faces is saving money from a monthly salary. We overspend by purchasing unnecessary items and clubbing them. Here we need to think about saving money. Here are some tips that would help save money from your salary.
Though we can give tips, it depends on your willpower and your determination to save money. So, get ready and strengthen your mind and save money from your salary.
Tips To Save Money From Salary
In this article
It can be pretty difficult to save money from the salary, but it is essential. Here are some tips which you would find useful while saving money. These tips are some essential tips which you would find easy to do. Once you start following these tips, you would observe the difference yourself.
1. Plan Out Your Budget:
The first step towards saving money is planning out your budget. Use a pen and paper, or excel sheet or any budgeting app, whichever you find suitable. Write down your total salary and the details of your expenses. Write the exact amount which you spend on your groceries, bills, debts, and other things. Use your passbook and bank records so that you can be accurate.
Write down the amount of money that you spend each month and then categorize them. You would find your unnecessary expenses and how you can cut out the expenses. Tracking the budget will help you to keep your expenses in check. It would help you in knowing where you are spending money more than required. Furthermore, it will help you to know how much you can save from your salary. Planning a budget will help you in not spending money unnecessarily.
2. Write Down Your Financial Goals:
Keeping goals is important as it would boost you to keep on saving. Write down the things for which you want to save your money. After writing them out, categorize them into two parts: short-term goals and long-term goals.
The short-term goals can include a new phone, a vacation with friends, or any such thing. Any small thing you do not have the money at present comes in the category of short-term goals. But, long-term goals can include buying a car, a house, or saving for retirement.
It is better to write down your goals in detail in a place. You would get to know the amount that you need to save for achieving your goals. Focus on the short-term goals first, as by achieving them, it would give you a morale boost to save money for the future.
Write down an approximate amount of money you need for each of your goals and start saving money. You also need to keep in mind that the prices of every single thing rise per day. Accordingly, you need to decide the amount which would help you in getting your goals. Once you achieve your short goals, like having that new gadget or those new speakers or cameras, you would get a boost to save money. It would further help you in saving money for your long-term goals.
3. Invest Money In Right Places:
The major problem that today’s youth face in the finance world is not knowing the proper place to invest. When a person starts working, he/she receives offers for life insurance and mutual funds. If you do not know about these investments, it is better not to invest in them. In the beginning, you can always go for safe investments like a recurring or fixed deposit.
A recurring or fixed deposit will help you in saving money for any short term goals. The least amount for these accounts is INR 500, and you would even get interested in the amount. It is better to keep your money on these deposits rather than going for other investments without any knowledge. You can always change your type of investment after doing enough research. Many well-wishers will suggest investing money in mutual funds, PPF, and other funds.
But, you must do your research on such things. You will get the urge to invest money in the stock market and mutual funds. But you should also know about the type of risks that they hold. If the market goes down, then you will face loss. Know about the times when you should invest and put your money after that.
Once you start doing research, you will get to know the pros and cons of each type of investment. You will get to know the various types of risks in the investments, and you will know the best one to invest your money. Till then, it is better to save your money in RD or FD. It will help you learn the value of saving money, and you will even get interested in the money you save. Invest in mutual funds and other types of funds only after you have done your research on them.
4. Health Insurance Policy:
This might be a controversial point, but we would explain why you should buy a health insurance policy. Life can be pretty unpredictable, and one can face medical emergencies at any moment of life. Generally, the cost of any medical treatment is high. It can even finish your monthly salary.
Not all companies provide medical facilities. To be on the safe side, one should always have a backup for any medical emergencies. Even if you have savings, it might not be enough for medical treatment. Hence, it is better to buy a health insurance policy so that you don’t have to worry about paying expensive medical bills while in the hospital.
We know that a person has to pay around INR 10,000- INR 15,000 per year as a premium. But it is better to spend INR 10,000 a year rather than paying a large sum of money for a simple medical treatment.
One has to pay around INR 1000 even for a simple check-up. So you can pretty much imagine the price that a person has to pay for an operation or any kind of medical treatment. A health insurance policy will cover all your medical needs and will pay your bills.
You can check for the best health insurance policy as per your budget on any website. Various websites will help you in comparing the prices and benefits of various health insurance policies.
You can go through them and then select the best health insurance policy for yourself. It is better to opt for a health insurance policy once you settle yourself after getting a job. It would help you to plan out your budget in a better way.
5. Alternative Transportation:
Most of the people have their vehicles which they use for going to work. If you are planning to save money, then use alternative transportation methods. The price of petrol and diesel is relatively high, and if you are using your vehicle for office, it might cost you a lot.
Let’s say that the price of petrol is INR 80 for now. If you are using your car for the office within 10kms, you are spending approximately INR 8000 per month. Well, that is too much spending. How can you save money on transportation? Below are some ways which would help you:
a. Public Transportation:
You can always opt for public transportation to go to the office. You can invest money for a bus or metro pass, which is relatively cheap and will save you many bucks. Moreover, public transportation will help you in saving money on parking and maintenance. If your office is within 10kms, you can go for public transportation and reach your office on time.
If you are not a fan of public transportation, you can always opt for carpooling. In carpooling, you can either book a regular car with your colleagues and travel to your office. One of the significant benefits of carpooling is that the money is divided, and everyone has to pay an equal amount of money. This helps save money you would have spent if you use your vehicle for work every day.
6. Saving On Rent:
If you live far away from your home, then it is better to share a flat with someone. Some people do like to have personal space, but if you want to save money, it is wise to share a room. It would help you in saving money on rent. Later on, you can use that money to buy your flat.
If you have shifted to a new town, it is better to search for a low rent flat. It would help you to know how much money you need to survive in the city. If the expenses are low, then it will benefit you in many ways. There are various hostels and PGs available in every city. You can look up in the renting websites and find a flat which is close to your office. If you share a room with 2 or 3 people, you won’t have to pay the whole rent by yourself. It is quite helpful for people who are new to the city and have just started working.
7. Saving On Telephone Bills:
Gone are the days when we used to have landlines and handsets, for which we had to pay every month. Now, we have tons of phone plans to choose from. You can always save money on your telephone bills if you choose your plans wisely—lookup for the plans that your telecom service is providing and compare it with other plans. If the plans are too costly, then match it with other telecom services and select a suitable one. With everything digital, you can look for better services and change them too. With the facility of sim porting, you can change your telecom service without changing your number.
Look for the plans which suit your budget and gives you excellent benefits. If you have a post-paid plan, it is better to switch it to pre-paid plans. If you compare the post and pre-paid plans, you will observe that the pre-paid plans are cheaper. They have better benefits, and you can change your plans at any time. While recharging your mobile phone, make sure that you use an online payment app. It will give you cash back and various coupons that you can use during your next recharge.
8. Saving On Groceries:
Though groceries come in the “essential” list, there are certain ways in which you can save money here. How can you save money in groceries? Here are some methods which would help you in doing so:
i. Stick To The List:
It is best to make a list before you go for grocery shopping. Shopping marts arrange their shelves in a way that customers would buy the things even if they don’t need it. Avoid buying things that are not on the list. Stick to your list as it would help you in not getting distracted. There are stalls near the billing counter, which are priced at less than INR 100. Customers tend to add these things while billing, without realizing that they do not need it and bought it for its price. Make sure that you buy things that are on your list and nothing else.
ii. Shopping Cards:
All shopping marts provide shopping cards to the customers. Make a shopping cart to the shopping mart which you visit often. For every purchase you make, points are added to the shopping cart. You can use these points for your next purchase and get a considerable discount. Most of the shopping marts even offer discounts if you use credit or debit cards.
iii. Buy In Bulk:
It is better to buy in bulk rather than buying 2 to 3 items every 5-9 days. Prepare a list of the items that you need for the whole month and then go shopping. It would help you in saving a huge amount of money. Instead of buying things every other day, prepare a list and go for grocery shopping during the weekends. Most of the shopping marts have a special sale going on during certain days. Mark these days and go to the marts. It would help you in getting discounts on certain items.
9. Shopping From Online Websites :
Everything is now available on online websites. Online shopping has made things easier for us, but they have also made it difficult to save money. Online shopping has allowed us to buy things from the comfort of our home. But, it becomes difficult to resist buying things which are on sale. The online shopping websites provide tons of discounts and conduct sales. But, most of the time, we tend to buy things which we do not need for its price. The algorithm of the websites works in a way to attract the customer and show them the things that they like. It would compel them to buy those things. In this state, how can you save money? Well, here are some useful things that you can do while you are shopping online.
Most of the online websites conduct sales at the same time. Before you proceed to buy anything from an online website, make sure to compare the prices. Various other websites might offer you the same thing at a lower cost. There are chances that you can get the same item at a lower cost in your nearby store. It is always better to compare the prices so that you get to know the places from where you can buy.
b. Use Payment Apps:
Most of the online websites are linked up with certain payment apps. If you are using payment apps for online shopping, then you can get cash back, discounts, and coupons. You can use them for later purposes. Moreover, you can even go for net banking. Many banks offer discounts when you use their net banking services. Check the type of discounts and cashback that you can get by using these apps and then proceed to pay.
c. Free Shipping:
Customers can get the option of free shipping if they buy above a certain amount. While you are comparing the prices of the items, also check for the shipping charges. Some websites have higher shipping charges, while some have lower charges. Compare the prices and then decide the website from which you should buy.
d. Go For Additional Cashbacks:
As stated above, most online websites even have coupons and cashback. Before you go for online shopping, check for coupons in your payment apps. Generally, shopping and payment apps are linked. Due to this, one can get tons of coupons and discount cards. Look for such options and then buy wisely. Moreover, you can even go for certain apps that provide coupons if you buy from their link. Check for such apps, as it would help you in saving tons of money.
e. Avoid Impulsive Buying:
The comfort of shopping at home has given a rise in impulsive buying. What is impulsive buying? While you are browsing online websites for shopping, you view a certain thing you like and save it. Next time when you open the app, you will see tons of similar items on the website, which would urge you to buy that item. Even if you do not want to buy the item, the continuous appearance of the item on your screen will make you buy it. The online websites use algorithms to lure customers into buying things. Make a list of things that you want to buy and buy only those things from the website. It would help you in avoiding impulsive buying and save money.
f. Avoid Buying Due To Offer Deals:
Online shopping websites do have tons of offers that can compel you to buy. Let’s say you want to buy a mobile cover. You see an offer going on, which consists of a mobile cover and a selfie stick. Though the price is a bit high, as per the website, they are giving you this on a discount. Though you do not need a selfie stick, you would go for the offer because of the discount and the extra item. Avoid doing that, as it’s completely unnecessary to spend money on such offers. Spend money on things that you need and avoid buying things that you do not need at all. You will not only end up spending your money but will have tons of things in your house, which are entirely useless.
10. Saving Money On Energy:
Every month we have to pay rent and the bills along with it. Electricity bills are quite expensive and can cost you a lot of money. Though we cannot completely cut down the electricity source, we can save some money on electricity. Here are some tips that would help you here.
i. Use CFL/LED Light Bulbs:
Instead of using normal tube lights and bulbs, it is better to install CFL or LED lights. They are highly energy-efficient and will help you in saving money on electricity bills. Once you switch to CFL or LED lights, you will observe a great change in your electricity bills. A single LED bulb can save up to INR 50, which is quite a lot. These bulbs last for a long time and are not harmful to the eyes.
ii. Switch To Air Seal:
Air sealing is a method that will help you in preventing any drafts. Drafts are the main reason as to why electricity bills rise during the summer season. By air sealing the home, it will help prevent the loss of cold air during the summer season.
iii. Unplug When Not Using:
It is better to unplug electronic devices when you do not use them. When you are not using your washing machine or your oven, it is better to unplug it. Most of the electronic devices do consume power even when they are switched off. If you are unplugging the devices while they are not in use, it will help you save a few bucks. Though it might not help you in saving much, every penny counts.
11. Controlling Expenses On Food:
Food is a basic need of human being. Without food, a person cannot survive. But how will you save money on food? Here are some ways in which you can do so.
A. Plan Your Whole Menu Before Shopping:
You can save money on food by planning out your menu. Design your menu every week, and then go for grocery shopping. It will help you to prevent money on items that are not necessary. Plan out what you want to eat, write down the ingredients, and then go shopping. Make sure that you buy all the necessary ingredients. After buying the essential ingredients, you can opt for anything extra that you need for your menu. Shopping marts do provide various kinds of deals on ingredients that you can look for.
Moreover, always go to a farmer’s shop as they provide fresh vegetables at a low price. If you compare the prices, you will see that the price of vegetables and fruits are higher in the shopping marts. Besides that, there is no surety as to whether these vegetables are fresh or not. It is better to go to the farmer’s shop and buy your veggies and fruits from there. They are not only healthy but will fit in your budget.
B. Packing Your Lunch:
Instead of eating out, you can put a bit of effort and cook your lunch. Though it will take some time, it will help you in saving money. By doing this, you are not only saving money but are also taking a step on remaining fit. Instead of eating from the office cafeteria, you can always carry your tiffin. It is good to know the art of cooking and have a nice homemade dinner or lunch. Instead of spending money on fast food and depending on the restaurants, you can cook your meals.
C. Avoid Eating Out:
Talking about going to restaurants, we all love to eat out once in a while. There is always a reason to eat out with friends, like birthdays, some festivals, and so on. It is better to avoid doing so, as it would cost a lot. Instead of dining out, you can always invite friends and colleagues for a potluck and cook together. That is way cheaper than spending money on a restaurant. The restaurants charge a high price for a simple meal, and you end up paying hefty taxes, and you even have to give a tip. Why not save this money and cook a meal together at home? It will cost half the money you spend in a restaurant, and it is way more fun too.
D. Go For Tiffin System:
If you are not a fan of cooking or are too busy to cook your meals, you can always go for tiffin systems. There are various tiffin services available in every city. They provide their customers with healthy food. Choose a tiffin system that will give you healthy food at a lower price. Though all the tiffin systems do not charge much money, it is always better to compare. The tiffin services will deliver your meal at your place. Whether you are at the office or home, you would get your tiffin. The least monthly charges that a tiffin service takes are INR 2000, including lunch, dinner, and delivery charges. You can plan your meals and fix your budget with the tiffin services.
E. Using Online Food Apps:
Various online food apps provide massive discounts and coupons. If you are ordering food from food apps, make sure to look for coupons and discounts to help you save bucks. These apps make it possible to deliver you with a nice meal at half its price. They even provide the customers with cashback if they use payment apps. Make sure you check for such cashback and offers before you order food from the online app.
12. Saving Money On Entertainment Services:
Everyone needs some sort of entertainment to chill and relax. It is one of the essential things for survival, but sometimes we spend a lot of money on it. Cutting out expenses on entertainment is one of the first things that people do so to save money. What are the things that you can cut off from entertainment?
i. Making Online Booking:
Instead of visiting the theatres to book your tickets, opt for online booking. Online booking provides customers with an option to select their seats. Besides that, it also gives cashback and discounts on tickets. Most of the time, there are coupons, and you even get a free ticket while you are booking. Look for such offers instead of getting tickets from the theatre. It will help you in getting cashback and save money.
ii. No Cable:
In today’s generation, everybody uses streaming services for watching movies and series. It would be better to cut down your cable and use that money on a streaming service in such cases. Various streaming services provide excellent deals and cost less than cable. Even if you are not a fan of streaming service, you can always buy a set-up box and plan your package. While planning your package, you would even get some free channels. Most of the companies have started doing this, and they are quite useful. You would pay only for the channels that you want to watch and not for anything else. By doing so, you are saving your money and getting nice entertainment services.
iii. Club Memberships:
After getting a job, most of the people buy certain club memberships. Most of the people do this out of peer pressure, and they don’t even use it after a year. It is better to cancel such club memberships. Why would anyone want to pay unnecessarily for a place they are not even visiting anymore? Not only that, but most of the people also take up gym memberships. Though remaining fit is the right choice, once your life starts getting busy, the membership loses its value. After getting busy, it becomes difficult to continue going to the gym or Zumba classes. Hence, it is wise to cancel these memberships. You can plan out your workout session and exercise accordingly. There are many workout videos available on the internet, from where you can learn the exercises for free. Likewise, you would remain fit and save money.
iv. Newspapers And Magazines:
Reading is a good habit, and one should never stop reading. It is good to opt for a newspaper or magazine subscription, but it will only be useful if you use it properly. Let’s be honest here. It becomes difficult to read the whole newspaper after getting up as we have to go to work. However, a weekly magazine subscription is okay as you get the weekend off and can read your magazines on that day. The newspaper will remain on the table unread and be a total waste of money. One should always remain updated about the news, and you can do so by downloading any news related app. All the newspaper companies have their app, where you can read the headlines every day. They are short and crisp and provide you with the exact news of the day. It is better to invest your money on an online newspaper subscription. They are cheap, handy and will keep you informed all the time.
13. Avoiding Drinking And Smoking:
People spend most of their money on either drinking or smoking. It starts as a sip or two on some occasions and then proceeds to become a regular habit. Not only is it harmful to health, but it is even harmful to your pocket. If a person is an avid drinker, it will take hardly a week or two to spend the entire drinks salary. Even in various pubs and restaurants, the price of a glass of wine is relatively high. It is better to avoid drinking whenever you can and save that money for your future. It might be difficult due to all peer pressure and the habit, but it is necessary to cut out drinking expenses. It is better to avoid drinking and smoking for a while as it will help you remain healthy and even save your money.
14. Try Automate Savings:
If you are still finding it difficult to save money and do not know what next to do, then we have a solution for you. You can open an automated savings account. By doing so, you will be able to save money from your salary. Try the “direct deposit” option in your savings bank account. Whenever you receive your salary, a part of it will directly go into the savings account. If your company does not have the “direct deposit” feature, get an automated savings transfer in your bank. It works the same way, and a part of your salary will go into the savings account. You can state the amount you want to save, and only that part of the salary will transfer to the savings account. Here you can save money without having to bother about it.
Moreover, this savings account can even act as your emergency account. Whenever you need money for emergencies like loan repayment, medical needs, or anything else, you can use the money from this savings account. Emergencies can occur at any time of life, and one needs to be ready for such emergencies. It is better to start saving as early as possible, as it will help you in saving a lot of amounts. Make sure that you have savings that will last you for at least 4 months. Use this savings account as your emergency account and avoid using the money from this account.
Why Should You Save Money?
If you are searching for reasons why you should save money, then we have tons of answers to that. Money is needed for every tiny thing. Whether you are going for a medical check-up or buying a small pen, you need money. Life is pretty uncertain, and one cannot predict the future. You need to save money as it will help you in times of emergencies. Be it a medical emergency or a natural calamity, and if you have savings, then you would be able to survive the disaster.
Spending money is common, but spending it on unnecessary things can land you in big trouble. You can always earn more money, but if you are not investing it in the right way or not saving it properly, then it is of waste. What is the use of earning tons of money if you cannot use it in times of emergencies? Moreover, a person can never work for his/her entire lifetime.
As per the basic rules, a person has to retire at the age of 60. If you have not done any kind of savings, then life after retirement would be pretty difficult for you. Even if you are a businessman, you need to save money, as it would help you to survive when the market is going down.
The economy of the country is not stable. If, by any chance, you lose your job or your business does not work out well, then you need to have some backup. Saving money is an essential backup, as it would give you some time to revive and work again.
Another major reason for saving money is for family. If a person does not save money, then it would be pretty difficult for him/her to set up a family. Education is not easy, and one needs to plan out for the near future beforehand.
Without proper savings, you would find it difficult to educate your child. There are many more reasons why you should save money. If you start saving money at an early age, then you will not face problems in the future or even in times of emergencies.
When Should You Start Saving Money?
This is one of the trickiest things that a person has to do. People say that you should start saving money as soon as you start doing a job. But, that is not at all correct. Once you start doing a job, you need to take care of tons of things. First, you need to settle down in the new city, see the expenses in the city. If you have any student loans, then start repaying them. While doing this, it would be difficult to save money.
You can start saving money after you clear your debts. But if your student loan is too big, then it might take a year or two to clear the loan. Then, when should you start saving money? Before you start saving, ask yourself, would you survive in the city with the remaining amount?
If the answer is yes, then start saving money, but if the answer is no, then wait for some months. After you spend a few months in the new city, you will get an idea of the expenses and the amount you need to survive.
Meanwhile, you can talk with your bank about the debt too. Fix a certain amount that you would pay each month and start repaying the debt. When you are almost halfway through your debt, start saving money immediately.
But what if there is an emergency and you do not have any savings? This is a concern, but we do have a solution for that. You can always opt for recurring or fixed deposit. Start transferring around INR 500 towards that account every month.
Though the amount will be less, it will be helpful. Once you start doing a job, you can open an RD or FD after a month and save around INR 500 in that account. When you find that you are finally settling, withdraw the amount and put it in your savings account.
How Much Should You Save From Your Salary?
It is not possible to save the whole amount from the salary. Everyone has some basic needs, and to fulfill them; we need to save money. So, how much can we save from our salary? One of the most efficient rules to save money is to follow the 50/30/20 rule. Now, what is the 50/30/20 rule?
This rule states the percentage of the money you should spend on your salary. The first 50% is to spend on your essential needs. Here, essential needs include groceries, rent, debt, bills, and other basic things. In simple language, the first 50% is for your survival, for the things that you need to survive the whole month. After spending the first 50%, you have another half of your salary in your hand. Out of this, keep 30% for your expenses.
We are humans, and it’s a tendency to spend some money for ourselves. Here, 30% can include anything like buying a gift for your friend, buying a new gadget for yourself. After spending 30%, you have 20% in your account. Now, this is the money which you should save. Save this 20% in your account, and do not spend it. It might be hard not to spend money, but keep in mind that it will benefit you at the end.
If you keep saving 20% of your salary every month, you would have a nice amount of money at the end of the year. You can use this money for anything, like buy a new phone. You won’t have to worry about any kind of emergencies if you save money.
Frequently Asked Questions
1. I have just started doing a job. Should I put my money in mutual funds?
It is better not to invest in mutual funds at the moment. If you have just started working and want to invest your money somewhere, it is better to open an RD or FD account. Research about mutual funds, find out the risks and when you feel ready, invest your money.
2. I am planning to buy a flat. How much money do I need to save?
The least amount that you would need to buy a flat is around 4-5 lakhs. Besides, the amount completely depends upon the location of the flat, the city and many more factors. If you are planning to buy a flat, then start saving around 20% of your monthly salary after 6 months of your job. It will take around 3-4 years to save enough money to buy a decent flat.
3. Should I buy a health insurance plan early?
If your company does not provide any medical facilities, then it is better to buy a health insurance plan. Once you start doing a job, look for a budget-friendly health insurance plan. Though you would have to pay for the plan every year, it would come handy in case of medical emergencies.
4. How can I save money in online shopping?
You can save money in online shopping by using payment apps for making the payment. These apps will provide you with cashback and discounts, which would help you to save a few bucks. Moreover, you can compare the prices of the items on different websites. It would show you the difference in the prices and help you in making your choice.
Saving money is one of the essential things that peoples should understand. In today’s generation, the prices for everything are rising, and the salary that we are getting is decreasing. In such situations, if a person has some savings, it would help him/her survive the bad economy of the world. Moreover, we do spend a lot of money on unnecessary things that we do not need. Why not sell those things and earn a few bucks? There are various selling websites where you can sell your old items at a reasonable price and get some money. You can use this money on something important or save it for the future. It is important to know that you are saving money for yourself. After you retire, your savings will help you with every little thing that you need. Be it for medical needs, educational purposes, or marriage, you will efficiently deal with these things if you save money.