Save money and Money will save you  -   Jamaican Proverbs 

Budgeting &   Savings

We do not live in a world where we take each day as it comes. Financial emergency may arise at any time. It is needless to say that having a savings/investment portfolio is important. Money is something that is exchanged also something that is saved. Money matters and is important for survival.

Here are a few reasons why it’s important to have savings and investments:

Transaction Motive-People save cash to bridge the interval between receiving the income and expenditure. The amount depends on the interval at which money is received. Businessmen and entrepreneurs have to keep some part of the income to meet the current needs. Amount held in liquid will depend on the business turnover. Transaction demand for money stays constant at all levels.

Precautionary motive- This means taking precautions. People hold cash to deal with contingencies like unemployment, health issues etc. They want to keep a part of contingency liability aside to us it in case of an emergency.

Speculative motive- People also hold cash to use it in the financial market. They want to take advantage of the movement in the financial market regarding future changes in price and rate of interest. The ROI and people’s tendency to spend money are inversely proportional.

Children’s education- The most important thing for a person is to educate his children and send them to the best school and college. It’s important to have savings for that so that you can provide your children with the best education.

Self-reliance- When you save, you get a feeling of self-reliance and power to do things. It gives you a feeling of independence.

For Family’s security- If something happens to you, your family should be well taken care of. Having a savings and an investment portfolio ensures that. Savings and investments are mutually connected. It is important to have a savings nest so that you are more in control of your future and life. Invest in HDFC Life’s various savings plans to secure your future.

General Savings Tips

1. An emergency fund is a must. Chances are you’ve already been told that you need an emergency fund somewhere in the ballpark of three to six months of your income. Yikes! Overwhelming, right? At America Saves, our motto is ‘Start Small. Think Big.’ In keeping with that, we recommend starting with an emergency fund savings goal of just $500. Learn more about emergency funds here.

2. Establish your budget. The best way to jumpstart establishing a budget is to realize your spending habits. On the first day of a new month, get a receipt for everything you purchase throughout the month. Stack the receipts into categories like restaurants, groceries, and personal care. At the end of the month you will be able to clearly see where your money is going. Additionally, your bank or credit union may have this as an online-banking feature. Seeing what you spend in total on food, shopping, etc. can be humbling!

3. Budget with cash and envelopes. If you have trouble with overspending, try the envelope budget system where you use a set amount of cash for most spending. And once the cash is gone, it's gone. Learn more about the envelope budget system here.

4. Don't just save money, save for your future. There IS a difference!. As you begin to #ThinkLikeASaver, don’t simply spend less. Save with a purpose, such as college expenses, retirement, or for emergencies. Learn more about what you should be saving for here.

If you’ve taken the America Saves pledge, you’ve already chosen a savings goal which means you’re ahead of the savings curve!

5. Save automatically. Setting up automatic savings is the easiest and most effective way to save, and it puts extra cash out of sight and out of mind. Automatic savings means you have a process in place to save at regular intervals, whether that’s monthly, weekly, or daily.

Instruct your employer to direct a certain amount from your paycheck each pay period and transfer it to a retirement or savings account (or both). Traditionally, you can set this up using your employer’s direct deposit, ask your HR representative for more details and set this up today.

If you don’t have an employer or maybe your sources of income vary, check out our other strategies to save automatically.

6. ‘Start Small. Think Big,’ with a short- term goal. The truth is, people save more successfully when they set a short-term goal. For instance, committing to saving $20 a week or a month for 6 months is much more attainable that setting a goal to save $500 a month for a year. Once you reach the short-term goal, you’ll have created a habit of saving you can be proud of! You’ll be able to keep going strong with a new goal.

7. Start saving for your retirement as early as possible. Few people get rich through their wages alone. It's the miracle of compound interest, or earning interest on your interest over many years, that builds wealth. Because time is on their side, the youngest workers are in the best position to save for retirement. Learn more about different options for saving for retirement in your workplace or on your own here.

8. Take full advantage of employer matches to your retirement plan. Often as an incentive, employers will match a certain amount of what you save in a retirement plan such as a 401(k). If you don't take full advantage of this match, you're leaving money on the table.

9. Save your windfalls and tax refunds. Every time you receive a windfall, such a work bonus, inheritance, contest winnings, or tax refund, put a portion into your savings account.

10. Make a savings plan. Those with a savings plan are twice as likely to save successfully. That's where America Saves comes in. If you take the America Saves Pledge, we'll help you set a goal and make a plan. And it doesn’t stop there. America Saves will keep you motivated with information, advice, tips, and reminders to help you reach your savings goal. Think of us as your own personal support system. Take the America Saves Pledge here.

11. Save your coins - literally. Putting aside just 50¢ a day over a year will get you almost halfway to an emergency fund. Check with your bank or credit union, and research apps that offer programs that round your purchases up to the nearest dollar and put the difference into a separate savings account.

12. Use the 24-Hour Rule. Avoid purchasing expensive or unnecessary items on impulse with a self-imposed 24-hour rule. For any non-essential item, wait 24 hours before purchasing. It’s perfect for online shopping where your items can simply be added to your cart to purchase later.

13. Treat yourself, but use it as an opportunity to save. Match the cost of your nonessential indulgences in savings. So, for example, if you splurge on a smoothie while out running errands, put the same amount into your savings account.

14. Calculate purchases by hours worked instead of cost. This mental math tactic really helps you to #ThinkLikeASaver. Take the amount of the item you want to purchase and divide it by your hourly wage. For example, if you’re considering a $50 pair of shoes and you make $10 an hour, ask yourself if those shoes are worth working for five hours. Sometimes they are, sometimes they won’t be.

15. Unsubscribe. Avoid temptation by unsubscribing from marketing emails and texts from the stores where you spend the most money. By law, each marketing email is required to have an unsubscribe link, usually at the bottom of the email or you can reply to any text with STOP, and that should opt you out of their list.

16. Place a reminder on your card. Remind yourself to think through every purchase by covering your card with a savings prompt such as, "Have you met your savings goal for the month?" Write the message on a piece of masking tape or colorful washi tape on your card.

17. Participate in a local Investment Development Account (or IDA) program. If your income is low, you may be eligible to participate in an IDA program where your savings are matched. In return for attending financial education sessions and planning to save for a home, education, or business, you typically receive at least $1 for every $1 you save, and sometimes much more. That means $25 saved each month could become several hundred dollars by the end of the year. Find an IDA program near you.

Banking, Credit, and Debt Savings Tips

18. Pay off credit cards in full each month. The miles and cash-back are only valuable if you're not falling into debt or paying interest. Learn more about debt and credit here.

19. Start with a goal of reducing your credit card debt by just $1,000. That $1,000 debt reduction will probably save you $150-200 a year in interest, and much more if you're paying penalty rates of 20-30 percent.

20. Use only the ATMs of your bank or credit union. Using the ATM of another financial institution once a week might seem like no big deal, but if it's costing you $3 for each withdrawal, that's more than $150 over the course of a year.

21. Check your credit report for free once a year. Use your annual free credit report from the three credit reporting bureaus to look for inaccuracies or opportunities to raise your score. Credit scores are used by loan providers, landlords, and others to determine what they’ll sell you, and at what price. For example, a low credit score can increase the cost of a 60-month, $20,000 auto loan by more than $5,000. Learn more about your credit score here.

22. Pay your bills on auto-pay. This ensures they are paid on time, in full to avoid late charges. As a bonus, some loan providers offer a small interest rate deduction if you enroll in auto-pay.

23. Get free debt counseling. The most widely available help managing your debt is with a Consumer Credit Counseling Services (CCCS) counselor. CCCS’ network of non-profit counselors can work with you confidentially and judgement-free to help you develop a budget, figure out your options, and negotiate with creditors to repay your debts. Best of all, the 45-90 minute counseling sessions are free of charge and come with no obligations. Get started here.

Entertainment Savings Tips

24. Take advantage of your library. Libraries are gold-mines of free entertainment. They offer several entertainment options including classes, e-books, and audio-books. Some libraries even allow you to borrow things like tools and sewing machines!

25. Browse online for free or low-cost local entertainment. Check out local events on Facebook or Eventbrite to plan some downtime. There are often events and activities listed that you probably aren’t aware are happening.

26. Volunteer at festivals. Cultural festivals and events often offer free admission to event volunteers. Contact the organizers of your favorite event to ask about volunteer opportunities and benefits.

Family and Friends Savings Tips

27. Create a family spending limit on gifts. Discuss placing spending limits on gifts within your family and/or a system where you only purchase one gift for one person over the holidays. Not only will it relieve financial stress for your family, but it allows you to focus on what really matters during special occasions and holidays.

28. Plan gift-giving well in advance. To go alongside spending limits, give yourself time! You’ll ensure that you’re giving the most thoughtful gifts, which usually end up being not as expensive. Besides, it will also give you the opportunity to look for sales.

29. It’s never too soon to start saving for college. The last thing kids need is more “stuff.” Consider asking for donations to the college fund if you have enough clothes, toys, and other needs for your little ones.

30. Don't buy cheap clothes for cheap's sake. There are times where it makes most sense to prioritize quality over price when purchasing clothes for the family. An inexpensive shirt or coat is a poor bargain for older family members if it wears out in less than a year, but could make sense for quickly growing children.

31. Organize a neighborhood swap meet. Here’s how it works: gather your friends and neighbors with kids around the same age and everyone brings gently used clothing, books, and school supplies, toys, etc., and receives a ticket for each item they bring. Each ticket entitles you to one item from the swap meet. If you contribute six books, you can leave with up to six new-to-you books. If you contribute seven items of clothing, you can leave with up to seven new-to-you items of clothing. All leftover items are donated.

32. Designate one day a week a "no spend day." Reserve one night a week for free family and friends fun. Cook at home, and plan out free activities such as game night, watching a movie, or going to the park.

Food Savings Tips

33. Brown bag your lunch. The reason you hear this tip so much is that it works! If buying lunch at work costs $5, but making lunch at home costs only $2.50, then in a year, you could afford to create a $500 emergency fund and still have money left over.

34. Commit to eating out one fewer time each month. Save money without sacrificing your lifestyle. Take small steps to reduce your dining budget. Start off with reducing the amount you eat out by just once per month.

35. Plan your meals in advance and stick to a list while grocery shopping. People who do food shopping with a list, and buy little else, spend much less money than those who decide what to buy when they get to the food market. The annual savings could easily be hundreds of dollars.

36. ‘I’ll take a water, thank you.’ It’s standard in the restaurant industry to mark up the cost of alcohol by three to five times. An easy way to cut down on your restaurant spending without changing your habits too drastically is to skip the beverages, alcoholic and non-alcoholic.

37. Save time and money by doubling the recipe. Next time you make a family favorite, double the recipe and freeze the leftovers for another day. That way you can get two meals out of one and use the ingredients more efficiently with less waste.

Health Savings Tips

38. Don't skimp on preventive healthcare. Routine dental checkups, for example, help prevent fillings, root canals, and dental crowns - all of which are expensive and no fun.

39. Go generic. Ask your physician if generic prescription drugs are a good option for you. Generic drugs can cost several hundred dollars less to purchase annually than brand-name drugs. And since physicians often don't know the costs you incur for a particular drug, you often have to ask.

40. Comparison shop for prescription drugs. Don't just rely on the closest drugstore because the cost to you can vary significantly from pharmacy to pharmacy. Make sure to check out your local pharmacist, supermarkets, wholesale clubs, and mail-order pharmacies.

41. Purchase store brand over-the-counter medications. Store brand medications often cost 20-40 percent less than nationally advertised brands, but are the exact same formula.

Home Savings Tips

42. Comparison shop for homeowners insurance. Before renewing your existing homeowners insurance policy each year, check out the rates of competing companies.

43. Refinance your mortgage. Explore if you have the option to refinance your mortgage to a lower interest rate. On a 15-year $100,000 fixed-rate mortgage, lowering the rate from 7 percent to 6.5 percent can save you more than $5,000 in interest charges over the life of the loan. And, you will accumulate home equity more rapidly, thus increasing your ability to cover those pesky unexpected home repairs.

44. Audit your home energy use. Ask your local electric or gas utility for a free or low-cost home energy audit. The audit may reveal inexpensive ways to reduce home heating and cooling costs by hundreds of dollars a year. Keep in mind that a payback period of less than three years, or even five years, usually will save you lots of money in the long-term. For more home energy savings tips, check out this blog post.

45. Weatherproof your home. Caulk holes and cracks that let warm air escape in the winter and cold air escape in the summer. Your local hardware store has materials, and quite possibly useful advice, about inexpensively stopping unwanted heat or cooling loss.

46. Keep the sun out. Keep your blinds or curtains closed during hot summer days. Blocking the sunlight really does help to keep your house cooler.

47. Use less water. Install low-flow shower-heads and faucet aerators to reduce your water usage and water costs.

48. Cut laundry detergent use in half. Many laundry detergents on the market sold today are highly concentrated. Be sure to use the smallest suggested amount. Making laundry detergent is said to be relatively cheap and easy, especially if you prefer to use greener, natural products.

49. Go natural. Speaking of making your laundry detergent, using everyday items you already have around your home to clean works for many. You’d be surprised what you can do with vinegar and lemon!

50. Lower the temperature on your water heater to 120 degrees. For every 10 degree reduction in temperature, you can save up to 5 percent on water heating costs.

51. Ditch the paper: Cutting out paper towels and using cloths and napkins that you can simply wash and reuse is a simple way to save.

52. Become a Coupon King or Queen. We all know that couponing can save you lots of dough! Even simply couponing for those essential household staples like toilet paper and cleaning supplies can add up quickly (and so will your stockpile!)

Transportation Savings Tips

53. Comparison shop for auto insurance. Before renewing your existing auto insurance policy each year, check out the rates of competing companies.

54. Check multiple sites for low airfares. Want to plan your dream vacation for cheap? Don't rely on a single airline search engine to show you all inexpensive fares. Some discount carriers do not allow their flights to be listed in these third-party searches, so you need to check their websites separately.

Looking for more tips, resources, and accountability to help you along your savings journey?

Saving money sounds easy, right? You just spend less, and throw the excess in a special account, and call it a day.

However, most people struggle to save money for one reason or another. We’re going to walk you through 7 tips to help you start saving money right away so that you can be financially healthier and hit your financial goals.

1 Open a Savings Account

If you don’t already have a savings account, now is the time to start one. It is significantly harder to “save” money that you leave in your checking account. It is imperative for you to stash it in another account.

The reason another account is helpful is that it allows you to set a very clear intention with your money. People who say, “oh, I’ll save whatever money is leftover…” will probably never have any money left over.

Once you have a savings account – you can get started. Sometimes the hardest step is just getting started – so as you open your account, put some money in it and do not touch it. Once you have a little saved, it often becomes easier to build upon that. The goal is to create a habit of saving instead of a habit of spending.

2   Name Your Savings Account

Another quick tip is to name your savings account. Most banks and many other financial institutions will allow you to add a name or nickname to your account. You can name your account anything that might help motivate you. Perhaps you could name it “travel” if you’re saving up for travel expenses, or something more humorous like “don’t touch unless you’re dying” if that’s more your speed.

Regardless of whether you officially name your account or not, you should set an intention for the money. It is much easier to save money when you’ve labeled it for a specific purpose – like “hobbies” – rather than just putting it back to “save.” Keep in mind though that this pool of money IS primarily a tool to help you out in a financial emergency. You don’t want to drain your entire bucket of savings for a vacation, for example.

Some people find it easier to actually create several smaller accounts and divide up their savings between those. If you like that idea better, it may be wiser to use an app instead of an official bank – as banks may have limits on the number of accounts you can have, or they may charge you a fee for each account.

3  Create a Budget or a Financial Plan

If you feel like you never have enough money to save, or you aren’t sure how much money you have available for saving, creating a budget or a financial plan can help you. There are many budgeting methods you can try including:

Budgeting Using the 50/30/20 Rule

How to Budget Using a Zero-Based Budget

Pay Yourself First Budget

The Envelope Budget Method

If you aren’t sure which budget sounds right to you, read the Ultimate Guide to Making a Budget. This resource will give you an overview of each budget type and also provides guidance for beginning a budget. The Ultimate Guide to Making a Budget also includes app recommendations, if you’d like to set up your budget in a more tech-savvy way.

4  Cut Your Expenses

If after making a budget, you feel like you don’t have enough money left over to save – it might be time to cut your expenses. While you might not be able to move to a cheaper home or reduce your car payment immediately, you might be able to cut back on your variable expenses – like groceries, for example.

You can also check with alternative cable and cell phone providers, to see if cheaper options exist. Put any savings that you create or find into your savings account. You were already “spending” it – so you shouldn’t notice it if you’re now putting it in savings instead.

5    Grab a Side Gig

So while working a second job may not be feasible, it might be critical to your financial health if you truly couldn’t find anywhere to cut expenses from and you’ve found yourself spending more money than you make every month.

Your side gig doesn’t have to be waiting tables or working retail on the weekends though. Consider turning your passion into a part-time job. Do you love fitness classes? Consider teaching one. Are you a math wizard or history buff? Consider tutoring high school students in the subject. Are you crafty? Consider an Etsy store.

6  Save it Automatically

If after creating your budget, you have an idea of how much you can save each pay period, have it transferred automatically.

Think of it this way. Does your health insurance ever not get paid? No – because your employer likely takes it out before your check ever hits your bank account.

The same concept can apply to the money you want to save. Simply set up an automated transfer for each of your paydays with the appropriate amount. Worst case scenario, if you end up needing some of that money, you can always transfer it back to your checking account. Be mindful of any fees that could accrue from too many savings withdrawals.

7  Follow Through and Track Your Progress

Once you start saving money, it is important to continue to do it and keep track of your progress. Some people find it helpful to set small rewards for when they achieve certain savings milestones. You obviously don’t want these rewards to wipe out the progress you’ve made in regard to saving, but it can be a great way to keep you motivated.

Another great way to keep track of your progress and stick to your savings plan is to keep a written log of how much money is in your savings account, what you’re saving towards, and how it makes you feel. If you’ve been particularly stressed about money in the past, having this log showing how much more relieved you feel can go a long way when it comes to keeping you on track.

Think of saving like dieting. Diets don’t work very well if we focus on all of the things we can’t have. But, if you change your mindset to one that focuses on all of the positive things that are coming from your improved diet – like your increased energy, your improved mood, and your heightened focus – you will feel more fulfilled and you’re more likely to stick to it. With savings, you have to focus on what that money allows you to do or gives you in the future – instead of focusing on that extra extravagance that you aren’t purchasing right away.

Eventually – something will come along and you’ll need to use a big portion of your savings (if not all of it.) This can also be a discouraging time, especially if you haven’t been saving money for very long. Simply remind yourself of how much better you were able to handle the financial situation by having the money saved – and that should another situation come up in the future, you need to be prepared.

Final Word

Saving money isn’t easy – that’s why most people don’t do it or don’t do enough of it. Everyone knows that saving money is important – but it can be a challenge because it requires discipline and sacrifice.

On your savings journey, you probably won’t be perfect. However, even saving a little here and there can go a long way in helping you head off or reduce the impact of any financial emergencies in the future. Hopefully these 7 quick tips gave you a good place to start saving so that you can stress less about money, improve your overall health, make better financial decisions, do what you love, and set a good example for those in your life.

Saving money helps you live your best life. The way you save (and spend) your money should align closely with your values. There are many reasons why saving money is important – but the top 5 reasons are that it helps you stress less about money, it can improve your health, it helps you make better decisions, saving allows you to do what you love, and it also helps you set a good example for your children.