In this article, we are going to look at the three most significant but forgotten rules of saving money effectively. These rules are actually common sense if we know them. However, most of us seem to have forgotten them and hence don’t practice them during our lifetime.
You can be rest assured that once you know and follow these rules for saving money, you will end up saving a good corpus. Let’s get started with the rules:
Rule 1: Do you know your purpose of saving money?
Why you should save money? It’s a valid question, isn’t it? Most professional financial planners will tell you that the main objectives of savings are to prepare for your future and for other contingencies. It’s good to be prepared for future and cover for emergencies. That said, you must remember that saving money is ‘not all about money’. In fact, saving money is about forgoing the ordinary for the extraordinary. It’s simple, you’ll have to clearly differentiate between your needs and wants. If you start forgoing or limiting some of the ordinary wants such as glittering night-outs, movies, and other such wants early in your life, you can be rest assured that these savings will help you prepare for your dream vacation or your favourite car in the future. Isn’t that extraordinary?
You must decide what’s more important for you, a fancy mobile, sports shoes, awesome clothes, or buying your engagement ring or a dream honeymoon with your own savings. You must follow the golden rule ‘to win many, you must lose some’. Here, you don’t even have to lose, but just have to subtly tweak your lifestyle for ensuring more savings and a better future.
That’s why savings is not about money. It’s about forgoing the ordinary things, which don’t have any major contribution in your life, for those extraordinary moments, which will not come again such as a dream honeymoon or an engagement ring or down payment for your dream home. Just imagine the self-confidence you’ll experience through saving this way and achieving your extraordinary dreams. Thus, never feel bad or pity yourself when you’re saving money. Remember, that you are forgoing the good things today for the greater things or the better things tomorrow. Now, that’s what you call saving money.
Therefore, even before you start saving money you must start thinking about your purpose of saving money. You must define what your extraordinary experiences in the future are for which you would love to save money starting today. Remember these extraordinary things will give you the following:
- – Financial stability
- – Security for future
- – Foreign vacations
- – Higher education in top universities for your children
- – Most importantly, the peace of mind and the feeling of accomplishment
Always keep thinking about your extraordinary goals, it will keep you highly motivated while saying no to ordinary things, which will help you have an extraordinary life.
Rule 2: Segmentation of your money
One of the key things you must ensure is the bank account where you’re saving your money must be different from the one where you spend the money. This way, you keep the savings process simple. The account where you save your money would be just dedicated to your savings. Thus, having a separate account for expenses ensures that you don’t confuse your savings with your expenses. This is basic, but is not followed by many. Do it, you will benefit.
Rule 3: Please note that every Rupee you earn counts
If you want to save Rs. 5 crore at retirement, you need to remember that every Re.1/- adds to your retirement corpus. Therefore, remember that if you can save Re.1/-, you can save any amount. Moreover, mutual fund SIPs allow you to start investing from Rs.500 per month. The key point that you need to remember is that when you saving Re.1/-, Rs.100, Rs.1000, Rs. 1 lakh, or Rs. 1 crore, the process is the same. Thus, every Rupee matters.
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.