Whether you earn ₹10,000 per month or ₹1 lakh, knowing how to save money monthly is a skill in itself. If you have trouble saving money or want to save monthly, it helps if you have an action plan or a checklist. It would help if you cultivated healthy financial habits that will make saving rather than spending most of your salary easier.
In this blog, we'll delve into ten practical strategies to help you save monthly more effectively, with real-life examples to make them relevant.
It may not be possible to eliminate debt entirely. You may have to borrow funds for various reasons. That said, some debts are better than others. For instance, home and education loans help you achieve specific life goals that add to your income and assets. But debt like credit cards can quickly spiral out of control if you don’t pay attention. Borrowing wisely means making informed decisions about loans and credit.
If you are still saving up per your monthly plan, you can use money management apps to automate your savings. FIT Rules on the Fi app do precisely with the added flexibility to channel your savings towards different goals. For example, you can set up a FIT rule like ‘Put aside ₹1000 on the 5th of every month in iPhone Jar’. Pretty cool, isn’t it?
If you don’t know what you are saving for, you may not have the incentive to keep diligently. This is why clear goals are essential. Have specific targets in mind and draw up a plan to save up for each of them. This will also make it easier to track your progress. Knowing you are getting closer to the goal will encourage you to save monthly. Having clear objectives motivates you to save consistently.
Imagine you aim to buy your dream home in five years. If the down payment is ₹1,000,000, you must save ₹16,667 monthly for the next five years to reach your goal. You can create ‘Jars’ on the Fi app for a new iPhone or a Goa trip.
Budgeting is the first rule of learning how to save money. To draw up a budget, you need to record all your income and note all your expenses. This will give you a better idea of how much you can save monthly. Identify areas where you can reduce discretionary spending, such as dining out or impulse shopping, and allocate those savings to your savings goals.
Instead of manually tracking your money, you can use Ask. Fi’s AI-powered analytics to automate your expenditure tracking and get deep insights into your finances.
Have you heard about the 50-30-20 budget rule? Read up here!
Today, many apps can make saving more accessible and less challenging. Some apps send timely reminders to save money as per your set timeline, while others help you track your progress. Some even reward you for meeting your saving goals. All these apps help you answer your question of how to save money every month.
If you’re looking an app that does it all - Download the Fi Money app. It encourages you to build better monetary habits, meet all your money goals & reward you for making significant financial choices. Fi and its licensed banking partner help categorise your daily, weekly & monthly expenses to manage your money online easily — so you spend smarter...not less.
When you receive unexpected windfalls like bonuses or tax refunds, consider allocating a significant portion to savings or investments. It's an excellent opportunity to boost your savings without impacting your expenses.
Suppose you receive a year-end bonus of ₹100,000. You decide to save 50% of it, which amounts to ₹50,000, and invest it in a fixed deposit (or a smart deposit!) or a mutual fund. Doing so allows you to grow your savings and make your money work for you.
Typically, you don't earn anything when you save money as cash monthly. Cash sitting idle at home doesn’t grow, and it’s only easier to spend. On the other hand, if you transfer your savings into a deposit or mutual funds, you can earn a decent amount of interest on the sum. So, find out the best ways you can invest and grow your hard earned money.
Review your monthly expenses and identify areas where you can cut back. Reducing discretionary spending can free up more money for savings. If you dine out frequently, consider cooking at home more often or opting for affordable meal options. By cutting down on dining expenses, you can save an extra ₹3,000 per month.
To discourage impulsive spending, consider locking a portion of your savings in fixed-term deposits or investments with penalties for early withdrawal. Invest a portion of your savings in a 3-year fixed deposit that imposes a 1% penalty for early withdrawal. This ensures that you think twice before accessing your savings for non-essential expenses.
Lastly, this may seem counterintuitive to saving money, but it is necessary to treat yourself occasionally. By indulging yourself sometimes, you can ensure that your impulses are satisfied. This will save you the trouble of submitting in a ‘cheat spend,’ which could be more significant than your finances can handle. So, if you have a sizable sum left over as savings, set aside a small portion of your salary for yourself and your wants.
You may not be able to follow all of these tips right away in one go. However, try to integrate these habits into your everyday financial routine. This will gradually make it easier for you to cultivate the habit of saving up a significant portion of your income every month.
You can open a zero-balance savings bank account. Next, get all your money questions answered by Ask Fi, an intuitive personal finance assistant. Regularly use the app, as it encourages you to build better monetary habits, meet all your money goals & reward you for making significant financial choices. Fi and its licensed banking partner help categorise your daily, weekly & monthly expenses to manage your money online easily — so you spend smarter...not less. If you upgrade to other account plans within Fi — you get access to premium features like Jump, US Stocks, Mutual Funds, etc. & not to mention up to 4x rewards!
Ideally, aim to save at least 20% of your monthly salary. Adjust this percentage based on your financial goals and current expenses.
Yes, many banks offer automatic transfer options for savings accounts. Additionally, various apps and fintech platforms specialize in automating savings.
It's advisable to prioritize savings by setting aside a portion of your salary before paying bills. This ensures that saving is a non-negotiable part of your financial routine.
Explore investment options like mutual funds, fixed deposits, or stocks that offer better returns than traditional savings accounts. Consider consulting a financial advisor for tailored investment advice.
No, it's not necessary to eliminate all discretionary spending. The key is to balance enjoying life and saving for the future. Set a reasonable budget for discretionary expenses and stick to it.
To manage a ₹20,000 salary, you need to follow a budgeting rule. Many guidelines can help you here, like the 50-20-30 rule or the save-then-spend rule. Whichever direction you follow, make sure that you limit spending on wants and discretionary expenses.
The 50-20-30 rule is a budgeting method that divides your after-tax income into needs, wants, and savings. The rule suggests that you should spend:
Think of this rule as a general guideline to manage your money instead of a hard and fast concept. You can adjust this to accommodate yourself better and build a foundational budgeting habit.
According to the 50-20 30 rule, you should save at least 20% of your salary. Multiple guidelines are similar to the 50 20 30 one, emphasising saving different percentages of your paycheck, but this ranges between 20%-30% on average.