Now, saving money in difficult times is a tough proposition although by no means an impossible one. But there are questions that need to be settled before one embarks on a savings course. How much money is to be savedIJ Where is it to be invested and how can one be sure that the money stays thereIJ writes Sana Riyaz
The prices of commodities are heading northward. It has become difficult for people to manage life with a limited budget. The only ray of hope appears in saving for the rainy day.
Now, saving money in difficult times is a tough proposition although by no means an impossible one. But there are questions that need to be settled before one embarks on a savings course. How much money is to be savedIJ Where is to be invested and how can one be sure that the money stays thereIJ’
Ajaz Khan, a former banker at SBI says, “Small savings schemes safe and attractive investment options to the public and at the same time mobilises resources for development. No doubt, banks offer savings account facilities. But, since the income is getting squeezed due to mounting expenses and our increasing requirements, small savings are getting difficult. But still, savings can be made if people acquire some thriftiness in their habits.”
On the other hand, Supriya Maheshwari, a home maker, says “my husband has a small-scale business and we have a good lifestyle. But at the end of the month, it becomes difficult for us to fulfill our children’s small needs even or to plan a weekend freak-out.”
These days personal savings have become necessary to lead a good lifestyle. Expenditure over unnecessary things can put an individual to problems. Saving habit is taught to everyone from childhood. Children save their pocket money in a piggy bank. It is said that “money saved is money earned.”
Savings means conservation of money with low risk. But, increased saving does not necessarily mean increased investment. A person may save money by putting money aside in a bank or in a pension plan.
Preeti Sahay, a working woman, says “I work in a company and I help in my family budget as well. Giving rent of the house, electricity bill, buying monthly items of use and providing good education to our children is something really difficult for us. No doubt, we do a lot of hard work for it, but still it becomes next to impossible to fulfill even the basic needs of the family members and so this is the reason I have to save for emergencies very ardently,” she further added.
A lot of people tend to think that they have to skimp on everything to create a proper budget. While this tactic does help, it also means that some things will have to be foregone or even given up. This, however, is not true. One has simply to shop to find comparatively inexpensive items and put the leftover money into the savings account.
There are some tricks and tips by which an individual could create a proper budget for the month and save for extra expenditure as well.
Set savings goals
Short-term goals are an easy proposition. If you want to buy a video game, find out how much it costs; if one wants to buy a house, determine how much of down payment will you need to make. For long-term goals, such as retirement, an individual needs to do a lot more planning and has to figure out how investments would help him achieve the goals.
If one feels one cannot save a penny or is unable to do it, it is recommended that he should reduce the expenses before he or she plans for future things.
Establish a time-frame
Set a particular date for accomplishing shorter-term goals and make sure the goal is attainable within that time period.
Figure out how much have you to save per week, per month or per paycheck to attain each of the savings goals. Take each thing you want to save for and figure out how much you need to start saving now. For most savings goals, it’s best to save the same amount consistently. There are also many apps one can download on their phone that will help an individual keep track of the expenses.
Keep a record of the expenses
What one saves depends on two activities, namely, how much one makes and how much he or she spends. As one has more control over how much he spends, it’s wiser to take a critical look at the expenses. Write down your expenditure for a couple weeks or a month. Be as detailed as possible and try not to leave out small purchases. Assign each purchase or expenditure a category such as rent, car insurance, car payments, phone bill, cable bill, utilities, gas, food, entertainment, etc.
Keep a small notebook with you at all times. Get in the habit of recording each expense that you make and keep the receipts. Sit down once a week with a small notebook and the receipts. Record the expenses in a larger notebook or a spreadsheet programme.
Prachi Gupta, a teacher in a kindergarten school, says “I remember that my maternal grandmother always had a small diary in which she used to write down the monthly budget. likewise, my mother also maintains a record of the budget. Unfortunately, I do not have this habit of maintaining a budget, but I would surely try to develop it.”
Make a budget
Once you have managed to balance the earnings with the savings goals and spending, prepare a budget so that you know each month or each paycheck how much you can spend on any given thing or category of things. This is especially important for expenses which tend to fluctuate, or which one knows he or she is going to have a particularly hard time restricting.
Stop using credit cards
Pay for everything with cash or money orders. Don’t use checks. It’s easier to overspend when one is withdrawing from a bank or credit account because one does not know exactly how much is left behind. If a person has cash, he can clearly notice his supply running low. An individual can even bundle up the predetermined amount of cash allocated for each expense with a label or keep separate jars for each expense. As you take out money from a jar for a particular expense, you would know how much is left and the person would also be reminded of his or her limit of expenses.
Take care of one’s possessions: In this way, one would need to replace items less. Also, don’t replace items until it’s absolutely necessary.