Financial wisdom for the year ahead: 5 practical ways to save money

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With the new just beginning, we all have made a list of our own resolutions. Out of these, it is more likely that getting your finances on track is a major one. Moreover, if you have been planning to save for that big day, then you are at the right place. This big day can be the day you want to buy your dream car, or the day of your wedding, or the day you’re booking tickets for your important world tour. Most often, the biggest hurdle when it comes to saving money is to get started. In addition, finding the right channel or means to save money can also be challenging. This article mentions some of the best ways to save money this 2022.

1. Note Down Your Expenses

The first and most important step is to note down your expenses. Understanding how much you spend on a daily, weekly, and monthly basis can help you understand your spending habits better. In addition, you can also consider tracking your spending based on the category of spending. For instance, you can record how much you spend on groceries, how much you pay for utilities, how much you allocate for your wants, and so on. This can help you better manage your spending habits and ultimately can help with your savings.

2. Count in Your Savings

Most often, people tend to save what is remaining after their expenses. However, this approach may not be helpful in the long run if you are looking to save enough money. An alternative and much more effective approach would be to set aside a certain amount of your income for savings as soon as you receive your income. This can help you budget your savings better. In addition, you can also be disciplined this way. You can also make a budget plan wherein you outline your expenses as well as your savings so that you have a better understanding of your finances.

3. Find Ways to Cut Down Your Spending

While saving is important, it is equally important to cut down your spending. In case your expenses are too high, it can be extremely challenging to set aside a certain amount to save. So, the best way is to start by identifying the non-essential items that you spend on. Then, work towards cutting your expenses on these items. In addition, you can also find out different ways to save on your fixed expenses that occur on a monthly basis such as your mobile phone charges, television packages, and others. Here are some helpful tips that can help you cut down your daily expenses.

You can consider using vouchers and coupons wherever applicable while making certain purchases.
Reduce unnecessary expenditures such as subscriptions and memberships that you do not use. Make sure to unsubscribe in case you don’t use the service.
Consider eating at home and reduce the number of times you order food from restaurants.
Whenever you feel like making a purchase, try to avoid purchasing them immediately. Give yourself a few days time before making the purchase to truly identify if the product is necessary for you or not.

4. Set Goals

Trying to achieve something without a goal does not really work. In order to achieve something, it is important to set a goal from the very beginning. A goal provides a sense of direction and quantifies what has to be achieved in order to meet the goal. You can start by noting down what you are saving for. It could be to fund yourself for a vacation, to get married, to save for retirement, or anything else. The next step is to identify how much money you will require to meet your savings goals. You can either set a short-term goal or a long-term goal for your plan.

Most often, short term goals are meant for a span of 1 year to 3 years. These types of goals suit best when it comes to saving for a vacation, paying the down payment of a car, or building an emergency fund such that it can sustain you for 3 months to 9 months in case of any uncertainties. On the other hand, long term goals usually involve saving for more than 4 years. Such goals suit best if you would like to fund your child’s education or plan your retirement.

5. Pick the Right Tools

There are plenty of financial instruments that can help you save. However, out of all these options, it is important to pick the right plan. You could consider a savings account, securities such as stocks or mutual funds, a certificate of deposit, or others.

In a Nutshell

When you plan to save, make sure that you set a goal and save using the right tools. You can set either short-term or long-term goals to meet your savings requirement. Depending on what you are saving for, you can choose a financial tool.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.

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