There is one big question that bothers almost all of us and that is - "how do I save money?" Almost all of us have had constant failed attempts in saving even a little money at the end of the month.
If you are a single working woman like me, I am sure your account balance is already exhausting by now, though it's just been eight days since the new month began. After all, we have to pay rent, electricity bill, phone bill, wifi bill, water bill, buy grocery, pay the domestic help... phew!
But really, what does it take to have good and consistent savings? The answer is not as difficult as it looks.
Here are a few things to keep in mind if you are determined to save money:
Common financial mistakes
We must make sure that even if we are struggling to manage our finances, it is necessary for us to maintain an emergency fund. Some of us are also resistant or too busy to initiate the process of starting an investment, which experts have said can be some of the common financial mistakes.
Radhika Binani, chief product officer of
Paisabazaar.com, said, "Some of the most common financial mistakes committed by single working women include not maintaining an adequate emergency fund, investing without setting financial goals, mixing insurance with investment, not creating retirement corpus and not building a credit history."
In times of emergency, Binani advises that we should ideally save up to at least six times of our monthly expenditures.
"Don’t treat your emergency fund as a savings bank account. These funds should not be used for random purposes. To get better returns on your emergency funds, you may park them in a liquid fund. It will give you the same level of liquidity like a savings bank account," Archit Gupta, founder and chief executive officer (CEO) of ClearTax advised.
In case if the emergency funds are inadequate, Binani advised that one can visit an online lending marketplace to compare personal loan or other credit options offered by various lenders based on your credit score, monthly income, among others, you can opt for the one that costs you the least.
"You need to think about securing your future. This includes planning for retirement. You have to build a corpus in your working years, which will be used for the post-retirement years. For this, you should choose an avenue which not only multiplies wealth but also in an inflation-beating manner. Equity fund may be an ideal avenue for retirement planning. You may start now with a nominal SIP of say Rs 10,00 and increase it as your salary increases," the clear tax head said.
Systematic Investment Plan or SIP is a type of mutual fund, which allows investing small amounts periodically instead of lump sums. The money gets cut, on a particular date set by you, directly from your bank account after finalising the scheme with the fund house. Investing
Keeping this in mind, Binani said single working women like us can select investment instruments as per the amount of risk we are willing to take and how much time we want to put in for achieving our financial goals.
"They can invest in short term debt mutual funds for financial goals maturing within three years. In hybrid funds for financial goals, maturing within 3–5 years and equity funds for those maturing after 5 years. Additionally, they can invest in 10-15 percent of their portfolio in gold funds to reduce the market risk arising out of inflation, macro-economic and global uncertainties," Binani said.
For those of us who like to live life king size during the month, we know for sure that investing can be difficult because we are unable to maintain funds.
For this, Binani advised that the best investment option to implement the mentioned strategy is to activate SIPs in your mutual fund schemes.
Handling last week of the month crisis
Which brings us back to the most basic question — how do I be comfortable, financially, towards the end of the month?
For suggestions on how to maintain our finances and an easy way to maintain the same, Binani said the best way is that our savings should follow the ‘pay yourself first’ strategy, based on the same lines
suggested in our earlier piece, which is a fixed proportion of your salary is first kept aside for savings and the amount left is then used for meeting monthly and expenses.
Aditya Kumar, founder and CEO of Qbera.com, a fintech company, said that maintaining a budget is key and we should allocate our money in a 50:30:20 ratio for the beginning, mid and end of the month which will help in saving 20 percent of our income at the end of the month.
For credit card users, Kumar said, "If you’re using a credit card, opt for a billing cycle that starts at the end of the month. The purchases that you make will be interest-free for at least 20 days in the following month, and bills can be paid off with your next month’s income. However, do take care to use your credit card only in the case of urgent requirements."
Kumar said the only way to maintain a budget is by being strict and true to your end.
"In the absence of any hard and fast rules, the stricter you remain to the schedule, the better are your chances of ensuring a decent saving by the end of the month," Kacker said.
In the case of overspending in a particular month, he advised that we should 'diligently save in the next month to avoid a huge dent in your savings. Each drop counts and every small step taken will eventually magnify your savings'.
Or, you could just sleep instead. We paid the electricity bill, remember?
Disclosure: The CNBCTV18.com editorial team does not engage in speculative or active trading in stock markets and follows its Code of Conduct on securities trading and investment. Any investor/ viewer is advised to carry out necessary diligence on their own or through a certified registered financial advisor for investment decisions.