When it comes to personal finance, one action that comes highly recommended by the experts yet is least successfully followed by most of us is saving. The act of putting aside part of your income for savings is an important step to ensure you are financially secure and stable both in the immediate present and in the long run. If you have been unable to save prudently until now, the new year is a good time to pull up your socks and put into action your saving goals.
In this article, we will talk about some great tips on saving money that you must try in the year 2020. But before that, let us try and understand why saving money is important.
Why is Saving Important?
Financial experts can’t stress enough about the importance of saving. If you can’t understand the fuss being made over the importance of saving money, keep reading below to know why setting aside part of your income is so significant:
- Building an emergency fund
Savings can be used to build an emergency fund. At one point of time or the other in our lives, we do face an emergency where we are need immediate funds. Be it for a medical emergency, for a car repair or to tide you over between job changes, an emergency fund can provide you with the money you need to get by.
- Retirement Planning
Everyone dreams of living their life after retirement in financial security. Since you will no longer be actively earning post retirement, your savings will help you lead a comfortable life without having to compromise on the lifestyle you have dreamt of. Saving from the beginning will help you build a sizeable retirement fund.
- Save for Luxury
If you are planning to go on your dream vacation or purchase an expensive item, instead of burdening your finances with a loan or dipping into your money to an extent where you end flat broke, you can use your savings to fund your goals. This will keep your financial stability from getting impacted severely.
- Become Financially Secure
With a comfortable corpus built from savings, you can bank on money at hand whenever you are in need. Whether it is for an emergency or just to plan a vacation, when you know you have savings, you can plan ahead without worrying about your financial health taking a severe hit.
Great Savings Tips to Try in 2020
Clearly, saving is important and the sooner you get started, the better it is. However, no matter when you get started, the important thing is to stick diligently to your savings plan. Now that the new year is already here and if you are planning to get started on your saving goals, here are some great saving tips you must try in 2020 to get well on your way to financial security and stability:
- Keep a check on the frivolous spending
One of the best ways to set aside money for saving is to cut down on the unnecessary spending. There are many expenses which are not really essential and take a huge toll on the monthly budget. It could be anything as simple as a cup of coffee in a café or a takeaway meal.
Go over your monthly budget from the previous months to categorize your expenses into the important ones and non-essential ones. Then, where you can, cut down on the non-essential spending you can do without, saving the money left over.
- Pay off the high-interest debts
You might not realize it but piling on the high-interest debts takes a huge toll on your finances in the long run. Especially with credit card bills, these debts cost a lot in finance charges, which adds to your expenses. In the new year, you can begin saving money by closing off these high-interest debts as soon as you can.
This will help you save money you would have paid as finance charges and additionally, after closing the debt, you can put away the money you paid as instalments as part of your savings.
- Invest in a systematic investment plan (SIP)
It can be easily agreed upon that the best way to make your savings grow is to invest them. So, if you are having trouble saving money, investing in a monthly SIP is a sure way to get you started on saving some cash right away. In a monthly SIP, you give standing instructions to your bank to deduct the instalment month after month directly from your bank account, which goes towards the investment plan you have chosen.
In this way, not only are you able to save your money but also invest it to create a sizeable corpus in the future. However, it is advisable that you research adequately into the investment you are making so that your savings are secure.
- Apply the 50-30-20 rule
If you have trouble carving out a part of your income towards savings, Elizabeth Warren’s 50-30-20 budgeting rule is a great way for you to get started on savings this year. According to this rule, you must create a budget where you allocate 50 per cent of your monthly income towards your regular expenses, 30 per cent towards wants and miscellaneous expenses and the remaining 20 per cent towards savings.
Stick to this rule diligently for your budget and you will be able to save substantially from your income as a regular habit.
- Shop smart
You can cut your expenses significantly and save the rest by getting great bargains when shopping. Instead of paying full price towards items of regular and luxury use, you can find great discounts in stores as well as online. The money you save on discounts and bargains can be put away as savings.
However, do remember that the cheapest bargain might not be the best bargain and be careful before hitting the ‘buy’ button.
- Go automatic
Nowadays, most banks offer the facility for standing instructions where a fixed amount of money mandated by the customer can be transferred monthly from the current account to a savings account.
If you mandate your bank to transfer a fixed amount to a savings account monthly and do not touch the funds in that account, you can easily build an emergency fund or save for the future.
- Unsubscribe to memberships you don’t use
If you have a club or gym membership you sparingly use or do not use at all, as a saving trick, close down the memberships. Since you have not been making use of the facilities you are paying for, you can put the money towards better use by saving it. The same also applies to magazine and online subscriptions you paid for but can no longer make time for. Cancel these subscriptions and put away the money in your savings fund.
- Cut back where you can
If you think you eat out too much or spend too much on electricity or water, making a few lifestyle changes can help you save significantly this year. Go over the money you spent in the previous year on excesses and evaluate where you can cut back. The good thing about this evaluation is that you can be as stringent or as casual as you want depending on how much you want to save in the year.
- Plan a budget
Making a budget is not something specific to the year 2020 but if you have been struggling with it in the past, the new year is a good time to start. Having a predetermined budget will help you plan your expenses and be more cautious when it comes to setting aside savings.
Nowadays, there are many apps available which can be used to plan a monthly budget and also keep track of expenses on a daily basis.
- Set realizable goals
When it comes to saving, motivation plays a big role. Once you know what you are saving for, you are more likely to set aside money for it. In 2020, set yourself some achievable goals to be realized by the end of the year and begin to set aside money where possible from your income. This will make you keener to save and you will also be able to enjoy the rewards of saving.
Remember, saving a little over time can help you build a sizeable corpus of funds you can use for whatever financial goals you have in mind. If you still need a little extra money to supplement your savings, you can always rely on PaySense to get an instant hassle-free personal loan.
One of India’s leading online loan platforms, PaySense allows potential borrowers to avail personal loans up to Rs 5 lakhs with their mobile app. Just download the PaySense app here, install on your phone, and upload your documents to check your eligibility. Once you are approved, you can calculate your EMI and loan tenure and get funds in your account instantly. For more queries, email us at [email protected].
Aahna Gandhi is an enthusiast traveller, writer and a PR Professional. She likes sharing memorable moments from her travels and inspire others to live a life full of wonder. Known for her content, she has worked for travel, technology, lifestyle, health sectors as well as finance.
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