You must have heard the proverb, “A penny saved is a penny earned”. It simply means that cutting down on your expenses today ensures you will save more money, which will help you create wealth with which you can retire comfortably. So money well saved during your working life will provide for you in your later years.
Starting early with your saving plans is the key for building wealth. With the New Year just around the corner, it is the perfect time to develop a savings habit that can have a long-lasting impact on your overall finances.
Take a look at some no-fail, money-saving habits you follow in the New Year.
Cut Down On Your Expenses
The rising costs of living and fixed incomes may make it difficult for you to save money. However, a strict budget plan in place can help control your expenses while making it easier for you to save money. Be in control of your money and keep a track of where it is going. You should also not spend money beyond your income. Even if your income grows in the New Year, use the growth to increase your savings rather than lifestyle and consumption spends. Invest the savings in instruments that help it multiply.
Pay Your Debts Timely And Regularly
Timely repayment of your debts would help you save money and will also help maintain a healthy credit score. By paying your loans EMIs and credit card dues on time, you also increase your prospects of fetching better loan offers in the future. So, in the New Year, you should also develop a habit of staying away from unnecessary debts. In case you already have existing debts, use your bonuses and increments to repay the unpaid debt.
Automate Your Money For Savings And Investments
This is one of the simplest, yet effective way to save money. Automating a fixed amount from your income for savings will not only save you from the perils of forgetfulness but will also keep your finances organised. You can have the same rule for your investments where you can set a date for your money to be diverted to various investment instruments.
Work On Emergency Fund
Building an emergency fund is one of the best money habits you can develop in the New Year. An emergency fund supports you in times of exigencies like job loss or medical needs. If you haven’t started building an emergency fund, the New Year can be the best time to start building this rainy day cover. Once you have begun saving for emergencies, do not stop it as it remains relevant financially for your life.
Understand Your Salary And Taxes
For effective money management and savings, it is crucial to understand your salary structure. Make sure you understand every component of your salary slip. If your income falls in the taxable income bracket, take some time out to understand how you can invest to save taxes. A smart taxation plan has the potential to help you save a significant amount of money every year — money that can be used to accelerate your wealth creation. You can take help from a financial advisor to be better aware of your tax saving investment options that can lower the tax liability and also increasing your savings.
Finally, always remember no amount of money is too small to save. The money you earn in the New Year through your regular job or a part-time job can be saved to secure your financial future.
The writer is CEO, BankBazaar.com, India’s leading online marketplace for loans and credit cards.