September 24, 2020
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Finance

Money Management Tips for Optimum Savings

1) Basic Principle of Money Management

Saving money depends on many factors like income and expenses. There is a famous formula Expenditure= Income- Savings.

Many people make the mistake of spending as soon as they receive their monthly income and then save the rest. Substantial saving is not possible with this method as some of the other extra expenditures are bound to occur almost every month or you may buy an expensive gadget you wanted to have for a long time. This will impact your savings and before you know it you won’t have the necessary funds when needed.

A good way to get over this is to decide on how much you want to save per month. This calculation is done based on the following factors – Income, Monthly Bills, Investments, Insurance, Savings, and others. Deduct the necessary expenditure and mandatory insurance and investments from the income, the amount you get you to have to save it. As soon as you get your monthly income transfer the savings to another bank and then you can spend the remaining amount.

2) Maintain Different Accounts

Create different bank accounts ( or you can take different wallets) and label them according to your expenses. Say, you have seven expense types, you can create seven accounts and name them Rent/EMI, Food, Education, Fuel, Medical, Water bill, Electricity bill. Now at the beginning of the month, transfer a predetermined amount to each account. For each expenditure spend from the respective account only. In this case, if the account gets to zero before the month ends then you will know you are going overboard with that particular expense and need to control the spending.

This method divided the expenses into different groups hence helping in keeping easy track of the monthly budget.

3) Look for Coupons and Offers

Whenever a new Business company/Payment system company is launched the company provides lots of offers and discounts to attract customers and to withstand the competition in the market. Take advantage of this as these offers and discounts are provided only until the company gathers enough recognition and establishes itself. For example, Google Pay started a cashback scheme where you will get some amount as cashback for each money transfer. You can pay bills through this app and get some of the money back.

Similarly, various e-commerce businesses offer coupons especially Shopping apps and Food apps. Keep an eye out for major Festivals or Government recognized important events because this is the time when most coupons are offered.

There are also third-party websites that offer coupons for famous e-commerce websites. You just have to find a genuine site and register on that it

4) Avoid Credit and Debit Cards

Always spend in cash whenever possible. When you notice your wallet shrinking you will realize you are spending a lot and will be mindful of your spending. When you use a card for purchases you will just get a notification that the money has been deducted from your bank and since you don’t see money being taken away from you physically you will not be alarmed about your expenses. So at least for small transactions pay using cash.