Copyright livemint
Saving money for the future is important. And while there are expenditures that shave off your monthly earnings due to necessity, here are some things you could be overspending on without realising its draining effect on the budget.Here's are five things to take into consideration to ensure you spend your money wisely and can have maximum savings where possible:Create a budgetIt is important to create both monthly and annual budgets in order to track your money efficiently. What this also allows you to do is splurge without fear when you need to — birthdays, celebrations, holidays, etc.You can also opt to create budget plans based on your payment schedule — daily, weekly, fortnightly, or based on your spending schedule — loan repayments, EMIs, schools fees, etc.The three broad tracking heads would be your earnings (salary, interest, etc.), your expenditures (debt, EMIs, purchases, groceries, food, travel, etc.), and your savings (including investments).Manage your debt repaymentIf you have debits that occur like clockwork — monthly loan repayments, EMIs, bills, and credit card repayments among others, ensure that you have money in your source account for these, and set reminders or make use of the bank's auto pay options to ensure you do not fall behind.Interest or penalty on late payments (especially when it happens repeatedly) can soon pile up into huge amounts that could have been avoided.Track your expensesThis includes spending at extravagant spots or eating out every day without budgeting for it. If you track how much you're spending on eating out or buying packaged foods, when you do have the option to make home food, the total could be an unpleasant surprise.Splurges can be baked into the budget so that they do not strain your finances; while ensuring you can have your celebrations too.Sort between requirements and wantsWhen you make purchases, try to categorise them in buckets that would signify the priority of the purchase.For example, you can prioritise which streaming services you actually watch the most and cancel those you haven't reached for in weeks. This will help shave off a chunk of expenses that are paid for and not used.Distinguish between YOLO and trying to “buy” happinessThe millennial philosophy of ‘YOLO’ or you only live once, can potentially morph into a dismissive response that avoids accountability. Yes, we only live once, and it is a nice experience to enjoy good things but check if these impulses are costing you a life with dignity.If and when you can make sacrifices for the big spend, go for it, but back-to-back splurges on luxury goods, expensive trips and viral lifestyle habits is not feasible if it is not in your budget. Self-examine if your spending habits are truly YOLO, or you're trying to “buy happiness” without properly considering the consequences.Make saving a habitIf your impulse control is not very good, you can take away the temptation by setting auto investments for the money in your bank account. Setting auto SIPs, fixed deposit debits, and mutual fund debits immediately after your salary has been credited, will ensure that your savings are done before you begin to spend.If you're not an average salary earner, you can also develop a formula that works for you — 60:40 for spend and save (including investments), or 50:30:20 for spend, save, invest, or any other break-up that works for your personal goals and requirements.
