Learn how to save up to 50% of your salary with smart financial habits.
According to the most common thumb rule of savings, you should allocate 50% of your income to expenses, 30% to discretionary spends, and 20% to savings. However, given the rising cost of living, saving even 20% becomes a hassle. Failing to save adequately today can impact your future and its financial stability. To avoid this, you must consider ways to save more money from your salary. If you are a salaried employee who wants to save more, this article is for you.
If you’re wondering how to save money from your salary, here’s a list of 10 easy tips you can implement to save more every month:
Buying a health insurance policy with monthly premium payments may seem counterintuitive when you’re trying to save money from your salary. However, it’s better to pay a fixed monthly premium towards your healthcare plan rather than paying a substantial sum of money due to unexpected medical costs and hospitalisations later. With medical costs rising sharply, it’s better to be insured than pay out of your pocket. Moreover, you benefit from low premium costs if you buy the insurance cover as a young adult.
A significant part of your monthly salary may be directed towards transport costs, especially if you live far from the office. Changing the way you commute to and from work can help you save money from your salary. If you have access to public transportation like buses, trains, metros, and auto, you can save a significant chunk of your salary that goes towards servicing petrol/diesel expenses. Another great alternative is carpooling. Sharing a ride to work can not just lower your average transportation cost but also reduce your carbon footprint.
This is another tip you can implement to save money from your salary. Since phone plans are a fixed-cost expense, switching to more optimised plans can help you save significantly over time. For instance, if you already have a Wi-Fi subscription at home and the office, you can avoid paying for a hefty mobile data plan. Instead, you can choose a more cost-effective alternative to reduce your overall recharging expenses. Similarly, most telecom companies today offer free 3-month to 1-year subscriptions to OTT platforms like Netflix, Amazon Prime, and Zee3. See if you can leverage these offers to cut back on your regular subscription payments and still enjoy the same entertainment platforms.
The simple act of shopping smarter can help you effectively save up to 50% of your income. With multiple online shopping platforms at your disposal, you can easily compare offers and discounts on products. Apart from locating websites that offer a product at the cheapest rate, you can also review cashback and credit card offers available. See if payment wallets like Google Pay and Paytm offer additional discounts on certain purchases. Similarly, you can leverage free delivery offers on products to save a little extra on shipping charges that generally boost the bottom line. Other smart shopping strategies include avoiding impulsive spending decisions during sale seasons. In a nutshell, while it is wise to take advantage of discounts and offers whenever possible, you should remain cautious about purchasing unnecessary items solely because they are on sale.
When considering ways to save money from your salary, you should implement some grocery shopping tips as well. A large chunk of one’s salary is spent on buying groceries for the household every month. Therefore, optimising grocery spending can definitely help you save some extra cash. Try making a shopping list of items you need before heading out to the store. Stick to this list to avoid the temptation of impulsive buys at supermarkets. A preplanned grocery list helps you stay in control. Instead of visiting the supermarket multiple times a week, stock up once. Bulk buying is not only cheaper but also helps minimise the temptation of impulsive spending. Additionally, you can consider enrolling yourself for a supermarket shopping card to unlock discounts, offers, rewards, and free gifts on purchases to lower your expenses in the long run.
Cutting back on discretionary spending is one of the best ways to save more. When trimming discretionary costs, entertainment expenses should be the first to go. While entertainment is a necessary component of enjoying a happy life, you should not be draining your wallet to simply meet entertainment needs. You can cut back on unnecessary entertainment spending by cancelling club memberships that generally cost a fortune, reducing subscriptions (if you have multiple and watch only a few), and foregoing your cable account if you exclusively use OTT platforms. Implementing some entertainment cutbacks can put a dent in your fixed expenses and increase your salary savings considerably.
Electricity bills are another significant fixed cost that can be lowered if you’re wondering how to save money from your salary. Simple strategies like switching off lights and fans when you step out of a room and unplugging devices when not in use can help avoid hefty electricity bills as well as protect the environment. Additionally, switching to LED lights offers up to 4x more power saving than regular light bulbs. LED lights also have better longevity, eliminating frequent replacement costs for at least a few years. These small savings can add up over time to help you save more of your salary.
When it comes to fixed costs, food expenses can take away a significant portion of your salary. Generally, food expenses swell because most salaried individuals prefer to eat out frequently. Even if you spend Rs. 300 on lunch outside every day, that adds up to a grand total of Rs. 7,500 for 25 days. If you want to learn how to save money from your salary, start cooking at home. Instead of heading out for lunch in between work, wake up an hour earlier and pack home-cooked food for lunch. Other than that, you can cut back on dining out in general to save on taxes and tips. While it’s not possible to eliminate eating out completely, you can limit these instances to a maximum of 2-3 outings and allocate a specific budget for the same when you’re planning for the month. Apart from saving up to 50% of your salary, implementing this tip can also improve your health.
Almost every month is interspersed with festivals, birthdays, anniversaries, farewell parties, and weddings. Buying a costly gift for each occasion can definitely exhaust your salary before the month-end rolls in. Therefore, instead of splashing on expensive gifts, you can try making your own cards and presents, at least for a few occasions. Hand-made gifts offer you a creative way to express your love and appreciation to friends and family, as well as save on gifts. Other than that, you can extend the DIY approach to other stuff as well, like completing basic home repairs to save a few extra bucks.
If you want to know how to save money from your salary, an easy and sure-shot way is to eliminate wasteful habits. Consumption habits like smoking or excessive drinking can put a strain on your wallet while also impacting your health. To enjoy a better life with fewer expenses, you should consider eliminating these wasteful habits.
Also Read : 10 Effective Ways to Invest Rs. 10 Lakh
Having a good job with a handsome paycheck is not enough. You need to learn the value of saving and wise investment to make your earnings count. Learning how to save money from your salary is one of the first steps in this direction. You can always master the art of savings by cutting down on fixed and variable expenses, going the DIY way, getting insured, and changing your lifestyle habits. Remember that practice makes perfect, and start implementing the tips mentioned above to cumulatively save up to 50% of your income.
You can save up to 50% of your salary by cutting back on discretionary spending, optimising expenses, shopping smarter, and changing your lifestyle.
As a salaried individual, you can save on income taxes by claiming your tax deductions and allowances. For instance, companies offer HRA, LTA, and other such allowances. Remember to review your compensation structure and claim these exemptions when you file your ITR.
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