Compiled by Ayush Thakkar
Savings is the amount of money left over after spending. People save for various life goals or aspirations, such as retirement, a child’s college education, the down payment for a home or car, a vacation, or several other examples.
There are basically two ways by which an individual can measure his saving for a given accounting period.
- Income – Savings = Expenses
Although the rearranged equation (Income-Expenses = Savings) seems relatively simple, it actually makes a huge difference. We are essentially putting savings over consumption by rearranging.
- Examine Balance Sheet at the start and end of the year and measure the increase in net worth, which reflects savings
There are several other advantages as well:
Many philosophers and financial experts have predicted a recession, and mass layoffs in multinational corporations have confirmed this. This will require you to bring some financial hatches. Almost all suggestions on “HOW TO SAVE MONEY” will tell you to remove everything fun from your budget, which doesn’t sound like fun at all.
The five ways to save money below can create savings without sacrificing your daily lifestyle.
Changing your cellphone/telephone bill plan.
We generally neglect this area but by cutting our cellphone bill expenses, we could score serious savings if we are willing to get creative with our cell phone spending. Try to change to an alternate service provider if you are finding it too costly.
Try a bill splitting/negotiation app.
These applications basically help you Identify recurring expenses you may have forgotten. Bill splitting apps can lower our unidentified costs. Additionally, they’ll offer to bargain the cost of a portion of your services, that could lessen the cost of expenses you can’t avoid.
Before you remove cash to pay for fancy light fixture or bench, think about doing it yourself. Usually, the cost of materials and a simple Google or YouTube search will save you a ton of money on your latest home project. When you need to do some DIY work (or any kind of work), borrow what you need from a friend or neighbor instead of going out and buying it.
Try a Staycation.
Going for a vacation while you are saving money is the worst thing to do. Instead of whisking your family away to the Greek Islands, consider taking them on a tour of your own city. It not only will save your money but also give rise to domestic tourism.
Control your fast-food expenses.
According to an American survey, the average household spends about $3,526 on food outside of the home each year. That is approximately $290 per month. Even though purchasing lunch a few times a week may seem innocuous at the moment, especially if your favorite eatery is close to your place of employment, you may save a significant amount of money by just bringing your own lunch. Thus, controlling your fast-food expense not only save your pockets, but also improve your health.
This table above shows you that if you save 500rs every month and invest that amount in SIP or Mutual Funds you can get approximately 380000 after 20 years at a rate of 10% p.a.
Saving habits should be instilled in children from an early age. In modern times, where the world gets shocks in terms of Sub-prime mortgage crisis & COVID-19, it’s very difficult to sustain in the future without savings. Topics like personal financial planning should be taught in schools to make students aware of the importance of saving.