Statistics say most people spend more money when they have more money. As income goes up, the standard of living of a person also rises. The ‘wants’ stealthily transform into ‘needs’, and items that once used to be luxuries morph into necessities. This mindset poses a problem, a big problem. You might go on ‘enjoying’ your life in your own chosen fashion, but you’re also limiting your ability to build wealth concurrently. And if you’re living beyond your means, you’re inviting big financial trouble.
Rising income also alters a person’s attitude. Today, a 6-month old phone is considered outdated, and Olas and Ubers of the world have taken over the humble and economical public transport. These are just a few examples that prove that we are victims of lifestyle inflation. This is why you must save money from your salary, and this should become a habit.
The truth is, saving money from your salary requires a lot of discipline and sincerity. In this article, we’ll talk about how to save money, how much to save from your salary and where to invest. Read on.
How Much of Your Salary Should You Save Every Month?
When it comes to how much to save, your income is the most important factor because, to a certain extent, you’re limited by your income. When saving money from your monthly income, your focus should not be on how much you earn but on how much you save.
The general rule of thumb that you can strive for with your monthly salary is 50% for living expenses, 30% for lifestyle expenses, and 20% for savings.
But this rule doesn’t take into account your personal goals. For example, if you are saving to buy a house, it will take a long time to save money for a down payment if you save just 20% of your salary. And what about other short-term goals like vacations or long-term goals like retirement?
Setting up a savings plan that works to meet your short-term and long-term financial goals needs tweaking the rules. Instead of spending 50% on living expenses, consider trimming it to 40%. If reducing it to 40% seems like a drastic move, consider reducing it by 1% and increasing your savings by 1% every month. Such an approach requires discipline and careful calculations, but it will definitely take you where you want to go in terms of your financial goals.
How To Save Money From Salary
Follow the following 6 steps to Save Money From Salary
Make a monthly budget plan
Saving money is all about keeping track of where your money is going and controlling your expenses. Make a monthly budget plan by dividing your expenses into major categories and stick to it. The budget will help you avoid overspending, and that means you will have more money to save.
Cut down on your monthly expenses
You cannot do without the following, but you can definitely find ways to lower the expenses.
- Mobile recharges
- Smart online shopping
- Prudent grocery shopping
- Entertainment expenses
- Electricity bill
- Outside food orders
- redit card spending
- Drinking & smoking expenses
Save & invest in the right savings tool
Depending on your financial goals, put your money away in a tool that allows you to save and invest for better returns. Some of the options are:
Download The Money Club app and start saving money from your salary
Say NO to debt
The idea is to save and earn interest on it. So, don’t take on new debt unless you have a good enough reason.
Save your salary increases or bonuses
Anytime you get a raise, incentive or bonus, it’s tempting to use it to reward yourself. Lifestyle creep is a real thing! Isn’t it? Just because you make more doesn’t mean you have to spend more! Fight the temptation and put the extra money straight into savings.
Pay your EMIs on time to avoid penalty fees
If you have an ongoing loan or credit card payments, make sure you don’t fail to make the monthly repayments. Missed or delayed payments mean late fees or penalties, which can take a significant amount from your salary and harm your saving potential. So, avoid late payments; consider setting up automatic payments to be taken out from your bank account every month.
How much you save from your salary and where you put it will determine how successful you have been in keeping the inflation monster from stealing your money. So, follow our 6 tips on how to save money from salary every month and beat the impact of inflation.