Ways to save money after monthly expenses

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Ruchika Bhagat, MD, Neeraj Bhagat & Co.

New Delhi. The phrase often used is “a penny saved is equal to a penny earned”. Benjamin Franklin coined this phrase. In other words, saving money is wiser than wasting it. So, if you want to improve your financial life and you know that cutting expenses will not be your goal, you should start thinking about ways to increase your income.

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Most of us have many household expenses. One way to simplify your life and save money is to minimize your expenses. When you reduce your household expenses, you have more money to invest and pay off your debts in the future.

Saving for the future can seem daunting, but if you put aside a little money each month, it will seem easier than you think. Paying attention to your monthly expenses, finding ways to reduce those expenses, and establishing a budget is the secret that will make you the strongest in terms of financial health.

A smart way to save money each month is to look at your monthly expenses and think about where you can cut your expenses. This means you can identify expenses that are non-essential. On average, a person spends 38-40% of their income on household needs. Here are 9 common monthly expenses and tips for saving just in case.

  1. lodging
    If you’ve taken out a home loan, you can save money by paying it off with a loan that has a lower interest rate than you’re paying. This will reduce your loan repayment costs and save you a lot over the life of the loan. If you live on rent, you can compare the EMI of the loan with your monthly rent. Then, if the two are equal, you can buy the property instead of paying the rent. Similarly, to reduce costs, you can look for roommates, rent a house for a longer period with a discount on the rent, or move to a smaller house or to a less expensive neighborhood.
  2. utilities
    Electricity is expected to be the biggest contributor to your monthly utility bill. So how do you reduce your electricity bill? Unplug appliances you don’t need, adjust your thermostat to reduce energy consumption, and turn off lights you don’t need.
  3. Food
    To save money on groceries, download one that lets you compare prices from different stores. Buy in bulk at places like Costco and Sam’s Club. Not only will this reduce your expenses, but you can also get discount coupons and gift certificates.
  4. transportation
    Parking and gas costs are included, getting from place to place is much more expensive than you might imagine. Here are the steps you can take to reduce the cost of transportation:

Instead of buying a new petrol/diesel car or leasing it, it would be better to buy an electric car.

Keep the car maintenance on time so that the car does not need to be repaired.

  • Avoid high speed driving and sudden braking to save fuel.
  • Carpool or walk whenever possible.
  1. Insurance
    Buying insurance not only protects you against future emergency expenses, but it is also tax-efficient. While buying an insurance policy, the policy should be chosen whose premium is low. You can try to get a discount to reduce the cost of insurance. This can be done by purchasing policies from the same insurance company.
  2. Credit card
    Credit card spending is the best way to invest your money. This gives us the advantage of the credit period and we take full advantage of the hard earned money. But, for this, it is necessary that the payment by credit card is made on the due date so that there is no penalty in the form of interest.
  3. Invest in fixed return instruments
    Warren Buffett once said, “The first rule of investing is not to lose money.” And the second rule is that you must not forget the first rule.

You don’t have to put all the eggs in one basket. So we should invest in different assets to reduce the risk. For example, some of the money can be invested in things like bank term deposits, some of the money in mutual funds, and some in government pensions.

The suggestion is to invest regularly in these long-term investment avenues and get good returns. It’s important to diversify because it doesn’t allow too much of one company or industry in your portfolio. This helps to mitigate risk and ensure that your investment remains solid and safe over the long term.

  1. Assess your spending habits
    Analyze your spending habits to understand that some expenses are unnecessary and can be reduced such as credit card bills. Staying away from these expenses will save lots of money which can be used for investments.

Another way to understand and improve your spending is to create a comprehensive monthly budget. Junk food and entertainment are the most popular categories that fall under unnecessary spending.

The budget can also be divided into wants and needs. Necessary expenses like food, electricity, rent, internet come in need and in need come such expenses without which work can be done.

  1. Automate your investments and be consistent
    Investing regularly is more advantageous than making lump sum investments. In a regular investment, a person is required to invest a specific amount every month, regardless of the price of the asset.

Some investment products like mutual funds have a Systematic Investment Plan (SIP) option. You can automate this investment. In this, every month, money comes out of your bank account to be invested in the fund. By this process, there is no room for emotions in investing and there is no delay in the use of money. It also helps maintain discipline in investing. Before choosing an investment, we must keep in mind certain things like its duration, the rate of inflation, the amount of the investment and the tax to be paid.

We should do expense planning and cash management. It will change your spending habits, which will help you reach your money goal. It is rightly said: “Do not save what remains after you have spent, but spend what remains after you have saved”.

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