How to save money? The biggest question in all our mind. The money we earn is not sufficient to fulfil our needs. Our need increases when we earn more. The demand never meets the supply in our life. So how to save more many with the salary we earn? The main topic that I discuss with my dad is always about saving money, I know there are many in the case because we need their expertise in saving money. But when I speak about it, the conclusion will be around inflation.
What is inflation?
In simple too many goods chase too few money. Example, I planned to buy a home at the age of 24 in a tier II city which cost around 50lakhs. But when I looked at the amount I have including loan, savings etc is 40 lakh. There is a deficit of 10 lakh. Now at the age of 25 I planned to buy a home in the same locality, I have 50 lakhs in hand and the rate of a house is 62 lakhs. This is the gap I still can’t fix. When look at the other side, in the age gap of 2 years am able to save 10 lakh. How beat this inflation?
I believe in “everything has two sides”.If God exist, evil also exists. Male and female. Rich and Poor etc. So I will explain two theories to all, and the one which worked for me in saving money. And at last for people who don’t accept my theory there is always one thing for you that is the lenders (in this case assume lenders as people) last resort called the bank. I will also give some bank savings scheme to save money.
I call this theory as 50 theory. Am not going to teach Mathematics here. I assume that you are a person who don’t have the habit of saving money. The theory is “spend 50% less than you earning, then it will only take you two years to save a year’s income. This is a huge amount really, do this for at least 5 months and you will thank me later. No one can save such money you fool, is that you think, am I right. Try and let me know is what my answer is. But never compromise on Consumption spending, okay.
Second theory on how to save money and I call this theory as 5 theory. And the explanation for this is “split your earnings in 5” and the five sets should be
- For living
- To make friends and develop your circle
- To learn
- Holiday trip
- To invest
I will give you an small thought about the 5 sets.
Allocate a part to your living and day to day expenses like eating, travel expenses etc. If you are a bachelor/spinster try to cook on your own. Avoid eating out as much you can so that you can save a lot of money and you won’t spoil your health.
2.To make friends:-
Friends are must in life and unfortunately am so lucky in that. Try to expand your circle, never say no for an outing with your best friend’s friend, he might be help you in the some situation. How to make friends? I have two rules/hack for it, buy lunch for two friends and do it for the person who is more knowledgeable than you, who helped in your career or in a much needed time. Otherwise never do it. Do it for 5 months and see your friends circle expanding, influence and reputation among your friends.
The much needed thing. Never say no to learning, whatever you learn(including out of your domain/course) will help you in a long/short run in life. Be humble, try to listen and learn as much you can. Buy books and start learning, btw never judge a book by its cover, say no to piracy.
See saving money is to enjoy life. Be stingy and not selfish. I’m not saying you to visit a foreign country every month and that is not practical too. Go the place near your place, go to new place every month, meet new people, learn their culture write a short blog about your journey and fell fresh every month. Try to stay in your relative’s home to cut hotel/food cost, buy them some fruits and make them happy. Go out explore the World and learn how to save money and never allow money to exploit you.
You can invest your money in different ways, as I said before there are some schemes announced by Government, namely NSC(National Savings Certificate) which is available only in post office. Its a good investment in the current date with lock in period of 6 years. Government bonds, the latest gold scheme announced by Central Government. There are many but am not going to explain it in detail, because it will be out of the scope of this article.
Both the theories are inter linked to each other and you have to find the link and save as much as you can. Try any of the theory for at least 5 months and see the results.
Some advice on how to save money:-
Buy things that you badly need. Don’t buy things out of envy. Example:- Do not buy a SUV for a small family of 4 members, don’t buy any luxury things just to show off. But buy things that are necessary and never compromise on the quality of a product. Say no to the thought “what he/she/they will think of me?” Its your life, satisfy yourself, never worry about society. I said you on how to save money but don’t ask how much money I saved there is a tip in this article itself.
Ending up with a famous Tamil song which I used to hear when I feel bad.