Getting started might just be the hardest thing about saving money. With all the day-to-day expenses and the imminent needs, it might be a tedious task for people to start saving for a bright future.
Worry not, as we bring you a step-by-step guide to help you start with your savings plan to secure your and your family’s future. Your journey for long-term savings begins in 8 these simple steps:
1. Recording Every Expense
Starting a savings plan depending on your monthly expenditure on essentials. Start keeping a track of each and every single rupee you spend to get a ballpark figure of your monthly expenses.
Once you have collected this data, the next step is to organize it into different categories (like groceries, gas, loans, food, etc.).
2. Start Budgeting Your Expenses
The next step is to start setting spending limits on the categories. Organize all of your expenses into a workable budget. This will help you in outlining the income to spending ratio, which can help you in setting up a savings plan accordingly. Limiting overspending becomes easier this way.
There might be some unexpected expenses such as car maintenance or physical checkups that might not occur regularly, so don’t forget to factor them into this step as well.
3. Find Effective Ways to Reduce Spendings
Setting spending limits on categories can only help you save little money. Here, you need to identify all types of non-essential spending within the first step, and try to cut it as much as possible. This can be things like dining out at expensive restaurants, unnecessary subscriptions, and much more.
4. Time to Set Savings Goals
Now that you have treaded the recording and analyzing grounds, it’s finally time to put that knowledge into use. The best way to save considerable money is to set a monthly savings goal. Ideally, you would want to save 10-15% of your income every month for a good start.
This will make the picture more clear to you about how “long-term” this savings plan would take to hit that intended money pool target that you’re looking to reach. Start with a very achievable short-term goal to build momentum. It will help you in getting acquainted with the process, and make savings a habit.
5. Right Tools for Right Savings
Depending on your savings goal, you must pick the right tools to assist you in your journey. For a short-term savings plan, you can consider using a savings account and FDs (Fixed Deposits) to store your saved money.
For long-term savings plans, you can use securities such as mutual funds or stocks. You can even start investing in ULIPs or SIPs to grow your savings. You can connect with investment accounts through a broker to maximize your returns.
6. Automate to Save Time
Checking and savings accounts are two different types that serve different purposes. Almost every bank offers automated transferring between both these accounts. The choice is yours about when and how much you need to transfer into your savings account. You can even split any direct deposits you get to devote a certain portion of your income directly into your savings account.
7. Keep a Close Eye on Progress
Keep a regular check on your budget and savings to see your progress. This will help you in keeping a tab on how well you’re following your savings plan, and if you can save even more.
Time to Start Saving
Now that you know all about how to get started and what steps to follow, it is time to put this guide to use, and save some big bucks to secure your future. Remember, sticking to your savings plan is only possible with commitment, and short or long-term goals to keep you motivated.
Krishna Murthy is the senior publisher at Finance XOD. He is not only the senior publisher but also the owner of Tricky Finance. Krishna Murthy was one of the brilliant students during his college days. He completed his education in MBA (Master of Business Administration), and he is currently managing the all workload for sharing the best banking information over the internet. The main purpose of starting Tricky Finance is to provide all the precious information related to businesses and the banks to his readers.