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5 money saving hacks for a financially secure future

  • Highlights

  • Optimise your cash flow by clearing overdue debts

  • Choose automatic money transfers to save a portion of your income every month

  • Reduce unnecessary expenses by sticking to a budget

  • Create an investment portfolio basis your risk appetite

Saving money is a crucial step towards a financially secure future. Maintaining a cash reserve will help you in a multitude of ways, some of which include handling emergencies, financing retirement or taking care of unexpected expenses. In addition, it is the simplest way to plan your finances, and you can do so on a monthly basis, regardless of how much you earn. Look at how you can save smartly by implementing these 5 tips.

1. Repay existing debt quickly

Start by taking care of your debts. Prioritise repayments and loans where you are paying a hefty interest rate. The sooner you are able to tackle these dues, the more you will save on interest payments. Also, target making part pre-payments to speed up the process further, or consolidate debt using a personal loan to make managing it easy.

2. Calculate your total income and set up automatic transfers

Instead of creating a budget each month and tracking various expenses, set up automatic transfers. This simply means automatically transferring some of your money into a savings or a retirement account. This ensures that come what may, you are saving regularly, month on month. Decide on this amount after taking into consideration your income, your fixed expenses and your savings goals. Target saving around 30% of your monthly income to be sure that you can build substantial wealth over time.

3. Evaluate your expenditure and curb unnecessary spending

You must separate your needs from your wants and prioritise expenditure. Being mindful of this will prevent impulse buys and ensure that you’re spending for all the right reasons. Additionally, look for discounts and sales and stick to a list when you go grocery shopping. These small steps will help you spend cautiously on an everyday basis, and annually, they will contribute significantly to your savings.

How to Grow Your EPF Savings

4. Invest a part of your savings

Saving means putting aside a portion of your income for future use. Investment is a way of growing this amount. Investments made in shares, stocks and bonds will multiply your money over time, whereas in PPF, FDs, and RDs are safer. They will offer lower returns, but these will be assured and safe from market fluctuations. So, according to your risk appetite, decide on an investment mix that combines high returns with safety. Ideally, 40% of your folio should comprise market-linked investments and 60% should comprise low-risk investments. As you get closer to retirement, reduce the high-risk components and invest more in low-risk ones.

5. Chart your financial goals and work methodically

When you list your goals, you can create a plan and ensure that whether you are saving or investing, your efforts are in line with your goals. So, be it to buy a home, or for your retirement, list your goals, break them into manageable chunks and work at each one methodically. This will help you achieve your targets in a sure, systematic manner.

It’s never too soon to begin saving and investing, so follow these tips to ensure that you make a solid start.

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