One of the most important things about us humans is that we tend to not do things if we find them difficult. This unfortunately holds true also in financial planning. Savings is a very difficult proposition, agreed! That said, it is your own hard-earned money. Then why look at the hardships rather than focusing on the brilliant long-term results that saving money brings. Therefore, the key to saving our money is to ensure that we don’t make things difficult for ourselves while doing it.
Here are 4 simple tips for saving your hard-earned money:
Having clear financial goals helps to no end
Don’t you think its vital to know what you are saving for? In simple words, without having clear financial targets, how will you know how much you will you need to save for achieving those targets? Financial planning is all about knowing how much do you need,by what time,and what would you need to set aside every month to accomplish your savings target.
Financial goals must be SMART
Ensure that your financial goals are Specific, Measurable, Attainable, Relevant, and Timely. This helps you have a clear blueprint in your mind, which tells you what you will need to save monthly and for how long, to achieve your targets.
SIP and save
Break the traditional ways of savings and explore mutual fund SIPs for saving your money. SIPs will not only help you beat inflation, but will also help you in achieving short and long-term goals such as buying a car, own home, retirement plans, and children’s education. In simple words, SIPs help small money grow into a bigger corpus. Best part is that SIPs are an automated way of saving every month, which creates investment discipline and help keep you on track.
Know what your time costs
Indeed! Your time is the most valuable thing you have for saving your hard-earned money. So, it’s in your interest to know how much your time is worth. Let’s say you earn approximately Rs.200 per hour (around Rs. 32,000 per month). Now, you planned a visit to the shopping mall all with your wife this weekend. While window shopping, your eyes spot your favorite Aldo Shoes for Rs.5000. You wanted them for some time.
Here, financial planning requires you to calculate how much time it would take for you to earn that money.In this case it will take 25 hours, which is roughly 3 working days. Therefore, if you consider the shoes worth your time, then go ahead, else don’t. Take a well-calibrated call. Yes, it’s not easy to think like this for everything you do in life, but imagine the larger picture that you want to achieve. Think of your dream home, best-in- class education for your children, and you’ll be fine. Please note it is nowhere near as difficult to save your hard-earned money as you make it it to be. It is just about proper planning,investment discipline, monitoring, and patience.
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.