Updated: Nov 13, 2020
Whether it is under compulsion, need of money or the sake of passion we always do underpaid jobs.
Today’s market is so competitive that we have to work with less salary.
In conditions like this saving small chunk every month is difficult. It is not that we don’t want, but we can’t or unable to do so with so much expenses.
Yeah, I even tried lowering my expenses but there are limits too. Well, you can’t avoid basic needs.
Switching to less expensive brands helped me but still not enough to save much. Then I learned that trying 2-3 things not enough to save money, I need more tricks.
You must’ve heard of 50-30-20 rule. According to this rule, you can spend a maximum of 50% of your income on ‘needs’, 30% on ‘wants’, and the remaining 20% is savings and investments.
Is this rule applicable to low salaried people like us?
I tried it and failed!! First problem was 50% of my monthly income was not enough to fulfill my basic needs. And most my ‘wants’ were bought on EMI.
My work needed me to travel, eat in hotels & restaurants, so I included those expenses in basic needs.
So it was almost impossible for me to save 20% but I did know this will create problem in future.
When my dad suddenly had heart attack late night, he was admitted in hospital and my mind was under pressure of two things simultaneously, one was money and other was his health.
Till that day I was unable to save money, so, I was under tension to collect the money.
Anyway I borrowed from friends & family that day but this incident really was an injection to my attitude towards money.
I was constantly in a search for ways to save more money and lowering expenses.
And I found the same old ways everywhere;
1. Track your expenses and tally them at end
2. Know your accounts; on which part you spend a major chunk
3. Concentrate on that ‘major chunk’
4. Eliminate ‘mistake expenses’
But how many of you really tried these steps; maybe none of you! That’s why you’re still here right!!
But in this article, I’ll dig dip in these steps and will share my experience with you.
Read this article thoroughly as I’ll tell how much I saved? And how? With some simple tricks.
Before that let me ask you, why do you want to save? What’s your goal?
Next point will answer these questions;
Why saving is important?
We try to make money, working night and day for our future. To make this future glorious, we need to save from first day.
Also, while we grind our asses to earn money, god has planned something else. The unexpected tragedies bring huge expenses, those can be medical bills, car maintenance, unemployment, etc.
To cater to these expenses we must have some savings to continue living.
Or else you’re saving for a new car, a house, marriage, or just to pay back borrowed money.
Whatever is your need is you just can’t spend all of your earnings.
Whether you earn less or more, all of us have same reasons to save.
"Financial peace isn't the acquisition of stuff. It's learning to live on less than you make, so you can give money back and have money to invest. You can't win until you do this."
- Dave Ramsey
Now, let’s get back to our point;
Saving with less salary will take more sincerity and change of habits. Savings will increase as you keep on doing following rules regularly.
As these were worked like magic with me,
1. Finding cheaper options
To do that you’ve to dig dip into every expense by breaking down all of your expenses in detail.
Then you’ve to find cheaper options for your every existing expense.
This saved me around Rs600 monthly (approx. USD8)
As I’m a bachelor and live independently, I don’t need a lot of groceries. So you can save more if you shop for the whole family.
2. Always prepare a list of items before going to shopping
Today’s shopping malls are made to attract consumers. Whenever you roam there you’ll end up buying something unnecessary.
Making list items to buy is important to keep the focus on important items.
I’m pretty sure this trick saved me thousands of rupees as I used to buy more shoes, jeans, shirts just because they looked eye-catching.
3. Don’t carry debit/credit card on shopping
Another trick is always calculate total cost approximately and take the same amount in cash with you (with some extra change).
Don’t take credit or debit cards with you on shopping.
This way, you won’t be able to buy anything other than the list.
4. Only shop on discount sales
Wait till the right moment and try to buy every good you need on discounts.
Keep searching for coupons and use them for big items.
I saved around Rs200 to Rs800 (USD3 to USD11). You can save more if you’re buying electronic items or clothing.
5. Buy in bulk
Buying in a small quantity will cost you more. So try to buy things in bulk.
Buying in bulk saved me around Rs300 to Rs700 (approx. USD5 to USD10) monthly.
You can save more as it depends on what you buy and how much?
6. Try to do things on your own
I learned cooking on my own just to reduce the cost of a maid. I also started cleaning my flat and did laundry on my own.
This really helped me reduce the cost of maid & you can use your things more carefully.
I mean how many times you’ll tell your maid to make Roti less oily!!
I saved around Rs3000 (approx. USD42) which I used to spend on a maid.
7. Use electricity & water carefully
Well, all of us forgot to turn off lights, taps, flushes in hurry, don’t we?
So I almost made a habit to turning off all of them when not in use and it saved me around Rs100 to Rs200 (approx. USD1.5 to USD3).
This is not much because I didn’t have AC and a fridge.
If you live with family in big house and have all types of electric appliances, you can save much more.
8. Buy second hand things or on EMI
Don’t be ashamed of your financial situation.
If you want to buy big equipment like a fridge, furniture, etc. try to buy it on EMI or you can buy second hand.
9. Make your monthly EMIs small
Don’t take any loans if you’ve a very low salary. But if you already have them, try to take on low EMIs.
The drawback of this is you’ll have to pay more interest but it’ll make your money management less hard.
10. Pay out high-interest loan
If you’ve any high interest loan like Personal Loan, try to pay it out as soon as possible.
Personal loans cost you 12% to 15% interest and then saving will not matter a lot.
My suggestion will be, put some lump-sum amount in FD (Fixed Deposit) yielding monthly dividend equal to your monthly EMI.
This will put some ease on a monthly budget.
I almost saved Rs5000 to Rs7000 (USD70 to USD98) every month by just putting some extra habits and sincerity.
Now let’s talk about investing.
If you do RD (Recurring Deposit) of Rs5000 monthly, considering 7% interest you can easily yield Rs62,311 in a year.
If you put this Rs5000 (approx. USD70) in mutual funds every month (SIP). Considering yearly growth of 12% you can easily yield 4Lac (approx. USD5633) in five years.
And it is obvious that your salary will increase year on year but habits you yield will stay the same and will increase your savings year on year.
I’ll stop with this quote;
"It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for."
- Robert Kiyosaki
Quick read "16 Rules To Manage Money Better Way"