“You must learn to save first and spend afterwards.”
- John Poole
The path to great riches, is just saving with a lot of discipline. You have the power of compounding. This is nothing but investing money, which gives you good returns. These returns are then reinvested, to get more returns. You have….Return on Return….Yes….compounding gives you a lot of money. But you are forgetting something. To enjoy the power of compounding, you must first invest some money. This money comes from your savings.
“ Savings are the root of your investments.”
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Going shopping? Say “NO ” to plastic money. Say “YES ” to real money. Plastic money….Yes, that’s shopping with your debit and credit cards. Shopping with your credit and debit cards, is just like turning on a tap and watching your hard earned money, flow away. Today is the age of online shopping. It is festival season and it’s raining deals. E-Commerce Companies are giving you, real attractive offers. Worse….they say, Hurry up. The deals won’t last for long.
So how can you save your hard earned money? Follow this simple approach. Try to live only on cash, for about two weeks. Use cash to pay for everything from daily expenses to shopping. Go shopping with high denomination, currency notes. Take INR 500 and INR 1000 notes with you and use this money for shopping.
Yes, E-Commerce Companies are raining deals. You feel it’s just a matter of time, before you get a good bargain. If you buy something you don’t need, it’s not a bargain. You are simply wasting your money. Before you make the online purchase….ask yourself this question. Do you really need this item? If not….don’t make the purchase and save your hard earned money. Find this decision difficult? Just store your credit and debit cards in a safe place. You have no option, but to forget the bargain.
"A bargain isn’t a bargain, unless it's something you need."
Benefits: You will be shocked, how much you save at the end of the month, by leaving your credit cards at home. You can use this money, to pay back any dues on your credit card.
The word “Budget” sends a shiver down the spine, of the youth in our country. Gen Y fears the B word. You need to understand, there is no saving, without a budget. Making a budget is real simple. Just write down all the income/salary, you earn. Then comes the difficult part. You need to set a limit, on how much you will spend on clothes, holiday trips, entertainment, movies and eating out. Why make a budget? Sometimes you never notice the small spends. The small gifts….the movie tickets….the parties….soon you have no money in your pocket. If you make a budget, you can easily track down the small expenses. Your hard earned money is safe. You actually find, you have more money to spend on yourself.
"Don't tell me what you value, show me your budget, and I'll tell you what you value." — Joe Biden
You have a big enemy, who just doesn’t allow you to save. This is the urge to splurge. Easy access to a credit card, is not helping matters. This is when a simple thumb rule, can help you save money.
Simply postpone a costly purchase, by 30 days.
Now, what is the point of postponing the purchase of that gaming laptop, high-definition TV, for a whole month? Oh….you just get the time to make a decision for a whole 30 days, whether you really need that gaming laptop or high-definition TV. If at the end of the month (30 days), you still feel the urge to buy that gaming laptop or high-definition TV, go ahead and make the purchase. This 30 day-rule works great, if you want to buy electronic gadgets, apparel, footwear and accessories.
Is this 30-day rule really difficult to follow? No….you don’t really deny yourself the item. You merely postpone the purchase for a month, till the time you are sure you really need it. You get time to make a sound decision. "Saving requires us to not get things now so that we can get bigger ones later." — Jean Chatzky
This is the time to remember the famous saying by Angelina Jolie. "Save one-third, live on one-third, and give away one-third." Sure….giving away one-third of your salary, is out of question. But you can definitely save your hard earned money and have a bright future.
Mr C.S.Sudheer is a management graduate. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.