Is your life running from salary to salary? Everything is empty at the end of the month? Do this work in the beginning itself…then you will not regret it

If you are troubled by the life of "salary to salary", then the only solution is to change the way you manage your money. Here is the method which can solve this problem of yours very easily.

Are you also one of those people whose life runs from salary to salary? Money comes in the account on the first date of the month and by the 15th-20th everything is cleared. Expenses keep on increasing and at the end of the month you are left with only disappointment. If this is your story, then believe me you are not alone. But it is very important to change this habit, because without savings your future can be insecure. Here know the method by which you will be able to save money easily. Then even if you blow away your entire salary at the end of the month, you will not regret it.

Why is money not saved? Understand the root cause

The biggest mistake most people make is that they wait till the end of the month to save.

Their formula is: Income – Expenses = Savings

The problem with this formula is that our expenses never reduce and by the end of the month, there is nothing left to save. If you are really looking for ways to save money, then you have to reverse this formula. The most powerful rule of successful financial planning is - "Pay Yourself First". This means that you have to set aside money for your savings and investments before your expenses. Your new formula should be: Income – Savings = Expenses. This small change is a 'game changer'. This means that as soon as you get your salary, you first have to set aside a part of your savings. After this, you have to run your entire month with the money that is left.

20% rule: The first step towards saving

A common financial rule says that you should save and invest at least 20 percent of your income at all costs. For example, if your salary is ₹40,000, then 20% of it is ₹8,000.

What to do: As soon as the salary comes into the account, first of all transfer this ₹8,000 to another savings account or invest it directly. Now you have ₹32,000 to spend. You have to manage your entire month in this amount. This may seem difficult in the beginning, but gradually it will become your habit and your salary management will improve automatically.

Where to invest? These are the best options

Now the question arises that where to invest this saved 20% money? Money will not grow just by keeping it in the bank. You have to put it to work. You can choose these options according to your risk appetite and goals:

SIP (Systematic Investment Plan)

This is the easiest and most popular way to invest in mutual funds. You can invest a small amount (eg. even ₹500) every month. SIP has given great returns in the long term.

PPF (Public Provident Fund)

This is a government scheme, which is completely safe and also provides the benefit of tax exemption. It is an excellent option for the long term.

RD (Recurring Deposit)

If you do not want to take any risk at all, then RD is a good option. You get fixed interest in this.

VPF (Voluntary Provident Fund)

If you are employed and your EPF is deducted, then you can increase your contribution through VPF. You get great interest on this as well as EPF.

Put a check on extravagance

When you have already invested 20% of your salary, you will have to manage with the remaining 80%. For this, you will have to cut down on your extravagant expenses like-

Understand the difference between need and want: Eating out, expensive shopping, latest gadgets - all these are wants, not needs.

Use of credit card: Use credit card only in emergency. It is not free money, but an expensive loan.

Temptation of online offers: Avoid buying non-essential things just by looking at the offer.

Control over entertainment: Make a budget for partying and going out with friends and stick to it.

FAQs

1. What if I cannot save 20%?

If saving 20% seems difficult, then start with 10%. It is important that you start. Gradually, when it becomes a habit and your income increases, then increase it to 15% and then to 20%.

2. Is investing in SIP risky?

SIP is linked to the equity market, so there is short-term risk in it. But if you invest for a longer period of 5-7 years or more, the risk reduces significantly and the chances of returns increase.

3. What is the right time to invest?

The best time to invest is 'today'. The sooner you start, the more you will benefit from the power of compounding. Investing within the first week of getting salary is the best strategy.