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5 Best Ways to Save Money: The top ways to save money in India

5 Best Ways to Save Money: The top ways to save money in India

5 Best Ways to Save Money: The top ways to save money in India

Saving money is an art, and unfortunately, only a few percent of the earning population of India has mastered this art. People still struggle to earn money, and there is a significant section of people who struggle to save it. The legendary investor Warren Buffet with a net worth of over $100 billion, once said, “Do not save what is left after spending, but spend what is left after saving.” He also advised allocating some of your present earnings towards your future to become wealthy. It makes so much sense to follow this, especially when it comes from the sixth richest person in the world. You have to focus on building assets by starting early in your career. This is how compounding will work in the long‐term in your wealth creation.   

If you are also one of those who find it difficult to save money, this article is worth reading for you. People often cite low income as one of the primary reasons for not saving money and investing. This is not entirely true, even if you earn Rs. 25,000‐30,000 a month, saving 10% of it, and putting it in a FIP deposit is not that difficult. You just need to sit down, write your fixed and variable expenses, analyze your spending patterns and figure out how to optimize them.

We will help you with knowing the best money-saving plans through this article. Go on reading….

1. Prepare a Budget:

The foremost thing you should start doing and teach in your habit is making a budget and sticking to it every month. This is a time-tested technique, and people avoid it thinking that it’s annoying and tedious. This budget will help you track your expenses which is a major problem you have been facing since many don’t even know where your salary is going. Once you save money, you can only start a systematic investment plan in a mutual fund to see your money grow.

Keep your budget simple; write your total income (including any rental income, stock dividend, interest on deposits, etc.) at the top. Now subtract all your fixed and variable expenses that you usually incur from it. The remaining amount is your savings; now, if you are left with little or no savings, start cutting your expenses. Opt for a cheaper broadband plan, reduce your shopping and travelling bills, move to a smaller apartment, prefer public transport for work, cancel all subscriptions you hardly use, etc. This will boost your savings which you can then put in the best SIP to invest.

2. Start Investing:

This is one of the best ways to save money since you have an obligation now to pay every month towards a recurring deposit or any other investment class. Now that you know that you have to pay a particular amount every month, it will automatically make its way into your budget. Start investing early in your career to benefit from compounding in the long run. If your income is less, then also start early, even if you start small. Many RD calculators are available online that you can use to compute returns based on the tenor, interest rate on RD, and the monthly investment amount

If you can incur a little risk, start a systematic investment plan (SIP) in a mutual fund that mostly gives higher returns than any bank deposits. The SIP frequency is monthly, similar to a recurring deposit, and opt for a large‐cap equity mutual fund for reduced risk. Look over the internet for the best SIP to invest and start putting money every month, even a small amount.

3. Reduce Your Existing Debt:

If you have single or multiple loans running, it is time to go for one-time restructuring to settle the small‐ticket loans. This will save you money which can be used for building assets. If it is a big‐ticket loan, then prefer making partial prepayments to finish the loan faster. How can this help you save money? You pay the interest, and the principal amount in monthly EMIs; the interest you paid for the entire tenor of the loan is over and above the amount you borrowed. By settling your loans, you will save the money you will be paying towards the future interest and invest in the best investment plan for 3 years.  

A credit card is another form of debt that you incur, and even if you default on its payment by one day, the interest charged is humongous. If you are not financially prudent in spending using credit cards, then prefer cancelling all your credit cards. Warren Buffett also suggested stopping using credit cards due to higher interest in them. He said you should rather look for the best money savings plans in interest-bearing assets to earn interest and not pay it. To compute the difference between what you can earn and what you are paying currently, use RD calculators available online.

4. Save Money by Claiming Deductions:

You can save money by claiming Income Tax deductions under Sections 80C to 80E. When you invest money in a mutual fund via a systematic investment plan, opt for a tax‐saver mutual fund like ELSS that gives you tax benefits. Also, many other tax‐saving investment classes like tax‐saver fixed deposits, life insurance policies, PPF, NSC, house rent allowance, education loan interest, home loan, etc. Reach out to a professional Chartered Accountant to know more such tips on saving taxes. Look for the best investment plan for 3 years that offers tax benefits as well, so that you can save money by claiming tax deductions and earn interest on your investments in these asset classes.

5. Miscellaneous Tricks:

The tricks covered in this section are as follows:

  • FD/RD Interest Rates: Research all the possible banks to get the best deal on your recurring deposit. Look for the highest interest rates, lowest lock‐in period, tax benefits, flexible tenor, ease of payment, etc.
  • Prepare Grocery List: Any supermarket has tons of stuff to excite you, but if you want to save money, then prepare a grocery list before entering the supermarket and stick to it. You can leave some cushion for you to buy something that is not there on your list.  
  • Shop Online: Look for discounts and festive season sales to do shopping online to get the best deals at the lowest prices. Compare different e‐commerce sites for additional discounts and lucrative cashback. The same goes while booking flight or movie tickets; book them in advance. The money saved here can be collectively used for building assets.
  • Avoid Expensive Places: You don’t need to visit the best pub or the swankiest restaurant in the city on weekends or birthdays. There are many other places for socializing and celebrating as well that are equally good. This is a key trick that will benefit the most in the long term regarding wealth creation.
  • Save Money on Fuel: You must have read about skyrocketing prices of petrol and diesel in India. In such a scenario, taking individual cars for work does not make much sense. You can think of carpooling or taking public transport. If you still want to use your car, then prefer installing a CNG kit, since CNG is cheaper than petrol or diesel. 

This is all we had for you in this edition of the best ways to save money in India. Remember, be it a recurring deposit or any other asset class in the likes of mutual funds investment via systematic investment plan or equities, start early and stay invested with a long‐term horizon. We hope these tricks to save money will benefit you a lot in your financial management.

If you want to start building assets with an FD or an RD, we at Shriram Finance Limited have many options. You can read more about our products and their features here. We offer the best interest rates with flexible terms and conditions. Allow us to serve you!!

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