Anil Rego
One of the main grouses that many in the new generation have is that there isn’t enough money to save. Beyond the noise is the sober fact that saving money requires as much effort, if not more, as earning it.
The entire ecosystem around us is about consumption. There are tonnes of offers promising ‘buy two get three’, attractive 50 percent discounts and ‘shop till you drop’. It is quite difficult to say no to such offers if you have worked very hard.
But, saving money is extremely important if you are planning for future goals. Living on paycheck to paycheck each month isn’t sustainable beyond a point. Hence, it is important to use effective tricks so that you can conserve your hard-earned money.
Scan six-months of expenses and target where you can cut costs
You can adopt one out of two ways to save more. You either earn more or spend less. Earning more isn’t as easy as watching a movie on Netflix. So, automatically the onus is spending less.
Looking at just one month and saving money isn’t doable. You have to look at six months of expenses pattern and find out where you can cut flab. This is a useful exercise especially for those who spend via debit or credit cards. Just pull up 5-6 months of monthly statements and voila! You can find out unnecessary costs.
What’s unnecessary? Well, think of those expenses that you could have easily avoided, but you didn’t. For instance, you took an Uber/Ola for a 2 km ride. Or, you bought a jacket that you don’t wear. Small things like these add up a lot when you look at over the long term. So, millennials make every rupee count.
Add your ‘personal tax’ on every paycheck
Have you seen how easily people fork up money for taxes, but if you ask them for help all they give is a frown. Our next saving trick is all about playing tax-man. The best part of the trick is that you can keep the taxes to yourself.
Here is what you need to do: Deduct 10 percent tax on your monthly take-home pay. For instance, if you earn Rs 30,000 per month, deduct 10 percent tax or Rs 3,000.
If you save Rs 3,000 per month and save it in a recurring deposit or a mutual fund, at the end of 12 months you can net a cool 6-8 percent return.
Why do we ask you to invest? This is because if you just keep it lying in your simple savings account or in cash, there is a high chance the money will be spent. This is not just a millennial issue. Idle money always gets spent. There is always some unplanned trip or some impulsive purchase, which will eat up your ‘tax money’.
Use an automatic account for hands-free investing
Have you seen how driverless cars move? Yes, it is a technological marvel. When we take out the manual intervention out of anything, certain habits are easier to maintain. This is why things that are automatic work so well. Be it a geyser with an automatic heat sensor, or a toaster that pops up piping-hot bread, or the utilitarian microwave, life was never so easy.
Millennials can make saving hands-free too. By doing a one-time setup and giving instructions to your bank, automatic investing brings the best of the world at your feet.
The best part is that you don’t even have to worry about saving it on your own ever again. Automatic saving systems include systematic investment plans or SIPs.
Make that side hustle that nobody knows about
All of us are good at quite a few things. But our pursuit of happiness leads to just one revolving door i.e. our jobs. Thus, begins our daily rigmarole. The best thing about our jobs is our salary or income. Ask any millennial and that’s the same answer.
Eventually, you might get a raise, but that will always be small. The only way to make serious amount of extra money is by doing another gig. Yes, that’s right. When you are good at two-three things, it is time to multi-task.
The side hustle may not be something as exotic as building rockets, doing accountancy or making the next best-selling novel. It has to be a simple job that you can do for fixed hours a week and get paid.
Easy examples can be being a babysitter for pets, looking after administration at a neighbourhood club, or even arranging help for rich/old people who would pay you.
The point is a small extra source of income will ensure that you are better-placed savings wise, and your financial prudence will guarantee that extra money isn’t spent. Do not underestimate the power of small incomes. They pack quite a punch when you save.
Embrace the sharing economy
When people do an activity together, it can save money. Seriously, it can save money if you plan and execute group buying well. Everything right from daily travel, sharing an online streaming account, making lunches for colleagues (instead of buying them at an eatery)—the list is endless.
Businesses operating around us have one goal: to sell more while keeping their cost of sales low. That is possible when many people come together and spend at the same time. This can be quite a savings trigger. Because you and your pals will time purchases together, each one of you can get discounts. This will help you save lots of money.
The sharing economy is built for millennials. Studies show that millennials don’t mind sharing as long as the experience remains good. Today, services, apps and internet allow people to embrace the sharing economy like never before. While things like carpooling existed earlier too, today the pooling happens across a range of products and services.
So, sit back, enjoy the fruits of sharing economy and start making that cash register tinkle with every activity. Share, save and repeat.
