The hardest thing about saving money is to get started. But it’s essential to achieve financial well-being and secure our future as it’s easy for our short-term happiness to override our long-term goal of saving.

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Upon receiving the paycheck, we must earmark a certain percentage of our income for savings before we spend that money on anything else. We could choose to have our bank transfer a pre-determined amount automatically to our savings account once the money is credited to us or we could opt to do it manually ourselves. This way we would never miss out on saving money.

Specific Tips for Saving

Once we understand the importance of having savings, we need to strategize and create goals that will help us stay on track. A critical part of setting forth financial goals is to ensure we are able to fulfil them. Towards this end, an online calculator can also be used to make sure that our needs align with the plan that we have put forth for ourselves.

Here are some tips that can be followed to start with savings:

Set Savings Goals

The best way to begin saving money is to set a goal. We need to start by thinking about the purpose that we want to save for – it could be because we’re getting married, going for higher studies, planning a vacation or probably retiring. Then comes the stage of figuring out how much money is needed and how long it might take us to save it.

Making a Budget

Equally important is to draw up a budget and stick to it. For this we need to be realistic about the financial situation of our household and set honest and achievable numbers which correspond with our expenditure. Just thinking about saving won’t suffice; we need to be intentional with our saving goals.

Understanding the Concept of Cash Flow

Before we think about saving, we need to understand about cash flow and how our personal household outgo currently looks like. We need to review our expenses and where our spending habits lie so that we can put in efforts to change things that leave us with money to save.

Working with Spouse/Partner

For those who are either married or live with a partner, it is important to have open communication about the household finances and work as a team to save. For this both need to be on the same page with their desires, goals, resources available and future plans. Even the best-laid plans can end up in turmoil without everyone on board.

Keep a Track of the Spending

If we know where our money is going, it becomes a lot easier to make changes to the pattern if needed. People should constantly evaluate their shopping and spending habits so that they can benefit from any extra savings possible. It’s important to make a conscious decision to set aside the saved amount.

Separate Wants from Needs

We need to understand and draw a difference between our needs and wants. When money is tight, it should be spent only when necessary, otherwise not. Like it’s often said ‘a penny saved is a penny earned’. That holds true and it’s important that we say no to anything that doesn’t align with our long-term financial goals, whether today or tomorrow.

Make It Automatic

Automating savings will ensure that the money stays. Waiting till the end of month to save will result in the likelihood of very little money left. Making it automatic will make sure that the money gets deposited straight from our pay check, or at least a portion will go into the savings account whenever a deposit is made.

Allocate the Assets

Some investments are less risky as compared to others that are more volatile. Generally, younger people need to be more proactive in investing while older people need to be a bit more conservative. Novice investors can start with a basket of investments, such as mutual funds.

Understand the Investment Costs

All investments involve certain costs that investors need to understand beforehand, whether it’s stocks and bonds, broker commissions, or mutual funds. So, before someone wants to take the plunge, it’s better to talk to an investment consultant.

Stick to an Investment Plan

Reviewing our investment strategy at least once or twice a year is necessary. Also, we must avoid being thrown off track by the headlines when allocating our funds. It’s crucial that we remain consistent with our investment plans.

Summing Up

Overall, we should review our budget and check the progress made on a month-by-month basis. Not only will this prove helpful in sticking to one’s personal savings plan but will also help in identifying and fixing problems, if any, quickly. Once we understand how money can be saved, it can go on to inspire us to find numerous other ways to save and hit our goals much faster.

The author, Aniketh Jain, is Chief Revenue Officer at Kaleyra. Views expressed are personal