How to Save Money – Practical Tips to Saving Money

Save Money

Our parents’ and grandparents’ were a thrifty lot. Our generation, not so much. We have been enticed (to some extent) by the gleaming malls, consumer loans, credit cards and clever advertising. But occasionally when we are stung by guilty pangs after overspending – we pause and think “how to save money?”

I have an uncle who is in his late seventies and he is fairly well off, but he belongs to a generation that laid a lot of emphasis on frugality. At this age also when he can easily afford to travel by cabs he chooses to travel by public transportation like bus and trains which sometimes puts me to shame!

Well, though at his age it may sound a little extreme and inadvisable but it is definitely eco-friendly and pocket friendly too. This is more out of habit than need for him; we could definitely take a lesson from him to some extent. Well this could be the first tip to save money; the simplest one and probably also the most difficult one: Spend Less

1. Spend Less

You do not have to be stingy or change your lifestyle to spend less. Just reviewing what you spend and how you spend can help you to a large extent.

  • You could start by looking at public transport or car pools rather than travelling by car all the time
  • While shopping look for deals or savings that are offered when making bulk purchases or otherwise (just compare the per unit rate of a moisturizer when you buy a 100 ml bottle and 500 ml bottle; the difference is considerable),
  • Make calls at off peak hours whenever possible etc.

Savings like these may look like insignificant individually but can prove to be significant in the long run.

2. Start Now!

Just contemplating how to save money doesn’t work – you need to start now!! Believe me, no matter how much you earn it will never be spare; your expenditure will always expand in proportion to your income. So do not wait for the right time to start saving. The earlier you start the better it is;

When you start young you have age at your side, responsibilities are less and the magic of compounding does wonders to your saving.


Rohan starts putting aside money as soon as he gets his first job at the age of 25. He puts Rs 1000 in a recurring deposit that gives 8% return, at the age of 45 the total value of his savings is Rs. 5.83 lakhs (approx).

Rohit waits till he turns 30; he also puts aside money in a recurring deposit at 8%; when he turns 45 the total value of his savings is Rs. 3.45 lakhs (approx). Just a 5 year gap and Rohan’s savings are about 70% higher than Rohits’s. Also Read Retirement plans blog

3. Be Regular

Another aspect highlighted by the above example is the need to be regular about your savings. You might miss once in a while due to some exigency or extra expenditures that might crop up but setting aside even a small amount every month can help you build a comfortable nest egg.

4. Have a Goal

Target the amount you want to save every month; it’s important that you have a goal and stick to it. Keeping to the goal is more important rather than having an ambitious goal.

You can start buy having a small goal. Remember you childhood days when saving a rupee from your pocket money each week to put in your piggy bank gave you a kick! Having a target makes it easier to achieve it.

Learn more about goal setting at our blog – power of goal setting

5. Prepare a Budget

You will be surprised when you sit down to prepare a list of your expenditures at least I was. After writing down the few basic expenditures like rent, electricity, phone etc I was not sure where the rest of my money went. The bank balance did not reflect much;

I was not sure how much we spent on groceries in a month because we just went and shopped without bothering about how much we were spending.

It is essential to have a clear idea of your income and expenditure so that you can identify the areas where you can save money and it will also help you help you sticking to your goals.

6. Avoid the Debt Trap

In today’s world getting a loan is easy! A lot of us have bought cars, houses, laptops and even holidays on EMIs; some of it is necessary. Buying is easy paying may be not so much!When giving a house loan the bank will do its due diligence to establish your creditworthiness* but when you take a personal loan to buy a fancy cell phone or whip out your credit card to buy a designer bag then the onus is on you.

Once you buy them you might be remorseful the next day but then the damage is already done. As it is personal loan and credit card are amongst the most expensive debt. Always pay your EMIs and credit card bills on time to avoid unnecessary charges. Read blogs on plan before you buy home and paying credit cards


Preeti is a big credit card fan; she buys whatever she wants on her credit card without blinking an eye. Life was smooth, she earned well, every month she got her salary and she paid her credit card bill on time. She is young has no responsibilities so why bother saving. One month due to some freak brush with the law the company accounts were frozen and she was not paid her salary for two months at a stretch.

She was in for a rude shock, no savings to fall back on; the mounting credit card charges (late payment charges, financial charges, interest) on the unpaid bill and “polite” recovery calls left her shaken. Two months later things were back to normal but Preeti was a reformed shopaholic who now pauses before pulling out her card.

7. Invest Wisely

Saving is just half the job done; you need to invest your money well. Do not put all the eggs in one basket or leave your money idle in a savings account. Fixed deposit is a good option that offers safety and liquidity but it does not beat inflation.

You need to balance risk and returns and make a diversified portfolio. You should explore equity, mutual funds, gold, bonds etc as investment options and make a decision as per your risk appetite.

Learn how to invest in India at our blog – How to invest in stock markets in India

Conclusion – Save Money

To save money, you need to put some effort. It should be inculcated as a habit, a part of lifestyle and not a onetime activity. To some it may seem like being stingy but it is essentially striving to maintain a balance between the present and the future.

It is important that you invest the money wisely so that your savings give you the best returns.

* describes creditworthiness as “An assessment of the likelihood that a borrower will default on their debt obligations. It is based upon factors, such as their history of repayment and their credit score.

Lending institutions also consider the availability of assets and extent of liabilities to determine the probability of default”

About the Author

Nidhi is an ex-banker with a passion for writing and reading. She now combines her banking experience with her love for writing and pens articles for various financial sites.

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