Whether you’re in your 20s or 50s, it is always a good financial habit to save money. The easiest way to save money is by cutting existing expenses. This is because many of us spending money frivolously every single month without even realising it. So, how do we realise it? By following these easy ways:
Know what you’re saving for
Before you even start saving, you need to know what your financial goal. This doesn’t have to be something long-term. If you can picture your goal, saving becomes that much easier. For example, if your goal is to buy a new phone or go on a vacation, you have a goal that will motivate you to cut expenses and save so you can achieve it.
Make a budget
You need to make a budget, so you know where you’re spending your money. Knowing how much goes towards your rent, groceries, utility bills, entertainment expenses, etc. will give you an idea where to start cutting expenses.
In today’s digital era, you don’t have to sit with a spreadsheet, manually entering expenses to make a budget anymore. A budget app can take care of all this. Apps such as Mvelopes or mTrakr let you allocate your budget for different expenses such as rent and food. They also help you identify areas in which you’re splurging and where you need to cut down.
Set aside a portion of your salary each month
If you’re serious about saving money every single month, then you need to learn how to save money from your salary. The easiest way is to set aside at least 10% of your salary into another account. You can start depositing this amount every month in a savings account and earn up to 4% p.a. interest on it, or even open a recurring deposit account and earn more interest upwards of 6% p.a.
Make use of income tax saving tips
If you earn an income, then you’re liable to pay income tax. However, not all income is taxable. An easy way to save money without doing any hard work is to make use of income tax saving tips.
If you’re employed at a company, see if they offer employees Food Cards and apply for one. A Food Card is a prepaid card where a portion of your salary gets credited into every month. This card can be used at grocery stores, restaurants, and even some bars. And the money that is deposited into this card is completely tax free.
Another tax saving tip from your salary is to check if HRA (House Rent Component) is part of your income. As a salaried person, a part of your HRA is not taxable under Section 10 (13A) of the Income Tax Act of 1961. The amount that gets exempted from tax is the lowest of these 3:
- The actual HRA you receive.
- 50% of salary if you’re living in a metro city and 40% if you’re living in a non-metro city.
- Excess of rent paid each year over 10% of your annual salary.
Other non-taxable include health insurance premiums (under Section 80D), home loan payments, investing in National Pension Scheme (NPS).
Saving money regularly can help you in unforeseen circumstances or even fulfil your goals and dreams that require financing.