Last updated Apr. 18, 2023 by Favour Chinaza
In India, saving money is strongly associated with being financially responsible. Money has a lot of power, and if you want respect from people, especially your relatives, you need to take your financial health seriously. Do you wish to learn how to save money? Unfortunately, the majority of Indians aren’t particularly adept at saving money.
When breaking bad financial habits, most people look for ways to save money and reduce spending. However, small savings add up over time, especially if done consistently, and doing multiple things at once may allow you to save significantly.
The Challenges to Saving Money For Indians
The biggest challenge of saving money is often just starting. Furthermore, a recent survey indicates that the saving rate of Indians is declining. This reduction in the saving rate is primarily due to numerous societal changes. More ways to spend, nuclear families, and inflation are just a few of the reasons why Indians struggle to save. Moreover, even with their savings, Indians are not prepared to look beyond fixed deposits. Because there are no growth assets in the portfolio, this attitude will result in an insufficient retirement corpus.
These simple money-saving techniques might assist you in creating a straightforward and practical plan to save enough for major or minor goals.
Related: 10 Simple Ways To Save Money (Tips For Any Budget!)
Best Ways to Save Money in India
1. Get Out of Debt
The first step towards financial freedom and saving money is getting out of debt. Before you start saving for anything, it’s common sense you first pay off your debts if you have one. You can save any money if you have plenty of debts hanging around your neck. Set up a strategy that will allow you to pay it off as quickly as possible. If you owe multiple debts, meet with your creditors and negotiate a reasonable way of paying them off without hampering your daily living costs.
Make a Separate Budget for Your Wants
Of course, saving money does not always imply depriving yourself of your occasional desires. For example, you might want to go out to eat once or twice a month, or you might want to buy new clothes. If this occurs, you cannot make it a habit to withdraw a small portion of your savings. Instead, set aside a small sum for this specific purpose. Just remember not to overdo it and limit how much you can let out without jeopardizing your goals.
2. Make Monthly Budget & Plan to Save Money
Most people avoid budgeting because it is stressful and time-consuming. Keeping track of how much you earn and spend may appear to others to be frugal behavior, but spending extravagantly can be detrimental to your finances. A well-planned budget helps you keep your spending habits in check and allows you to save money.
The most important factor to consider is your monthly income, or weekly if you are paid every week. However, for a more managed finance, the former is preferable. However, this is where your future expenses and savings will be determined. Therefore, the answer to how much you can spend and save depends on how much money you make.
Following that, you should consider your average monthly expenses. This is the amount that should be budgeted for. For example, if you spend at least $500 (approximately 30,000 INR) per month, your budget should not be less than this amount.
Allocate Your Savings
It cannot be easy to put money into savings without knowing what it will be used for. But it gets easier to save if you create a budget and set up an automatic savings. Even if you have a goal in mind, allocating your savings to specific goals is a more efficient practice. For example, you could set aside 25% for a future vehicle, 25% for a home, 25% for a business, and so on. Of course, this is optional, and you can skip it if you prefer, but you will get better results if you do.
3. Avoid Impulsive Spending
Every savings strategy is built around a well-planned budget. Budgeting helps you manage expenses and close the gap between savings and investment over a year. By reviewing your credit card statements, receipts, and bank statements, you can calculate your regular bills, such as rent, insurance, mortgage or home loan, utility bills, transportation, and electricity.
This is one of the bad spending habits to avoid if you want to save more and build wealth because it affects everyone. For example, you go to a store intending to purchase only one item but several items, most of which are unnecessary. This is known as impulsive spending or buying on the spur of the moment.
Use a Shopping List
One effective way to combat this habit is to use a shopping list to avoid unnecessary spending. This list outlines your shopping objectives and assists you in distinguishing between needs and wants.
Using a Shopping list is a great way to save money because it keeps you from spending money on things you don’t need. There are a lot of mobile coupon apps to save money shopping you should take advantage of. Moreover, the extra rupees saved from impulse purchases can add significantly to your savings.
Meal Planning Instead Of Eating Out Daily
Since food takes up a large part of expenses, you can look into more affordable ways than eating out. For instance, you can look into meal planning. Meal planning will take a lot more time and effort since you have to prepare ingredients, but it will be much more cost-efficient than eating at restaurants. Even fast-food diners can get expensive (not to mention unhealthy) if taken daily. On the other hand, meal planning will let you cook dishes that can last for one week straight.
Staycations Instead Of Vacations
Suppose everyone is going on vacation, but you don’t have the budget to go out of the country. In this case, you can do your own “staycation.” Here, instead of going to other cities, you can enjoy the sunlight in your backyard, visit local parks, and still have memorable times alone or with other people. You will still have fun without having to spend a lot.
4. Open a Profitable Saving Account
Saved money is exactly what it is. Do you know a way to make your money work for you? Saving money in a bank savings account can earn you some interest. First, check which bank has the highest interest rate, and learn how to calculate an interest rate. Most banks in India have an interest rate of 3.5% per year. Therefore, the bank where you want to open a savings account should offer up to 7% interest per year. Banks that provide this high interest include Kotak Mahindra, Yes Bank, and many others.
A fixed deposit is another excellent way to earn money by saving it. For more information, please get in touch with your bank.
Make Use Of A Piggy Bank
Using toy-like piggy banks as an adult may appear absurd at first. However, this is a useful tool to have on hand, especially if you frequently work with coins and spare change. Although it may not appear so, collecting coins can result in significant savings in the long run. Therefore, you should think about keeping a piggy bank on hand. This simple task will assist you in making the most of your budget.
5. Plan Your Retirement Money to Save & Invest
Everyone who earns money in any capacity (self-employed, public servant, or business owner) needs something to fall back on when we reach one of our most vulnerable ages—old age.
Locate a reputable insurance company and open a retirement account with them. Most insurance companies invest your retirement funds and pay you dividends that are added to your retirement account. Avoid touching your retirement savings; it’s your exit strategy after years of hard work. Old age is wonderful, but it can become a nightmare if you don’t prepare for it.
6. Set Short and Long-term Savings Goals
Setting savings goals is an excellent way to ensure that you are prepared for future expenses. For example, you can set a short-term goal for a future expense, such as a vacation, and a long-term goal for retirement. This will allow you to concentrate on your saving efforts and ensure you have the funds when needed. Saving money may appear difficult initially, but it will become easier with time if you begin small and make it a habit.
7. Have the Right Attitude
Even if you follow the above tips, you will not see growth or satisfaction from your progress unless you have the right mindset. To fully immerse in your task, you must be completely determined and committed to achieving your objectives. Another mindset that you should have is one of financial control. Spend only what you can afford to lose, even if it sounds like a broken record. Don’t compromise your long-term goals for the sake of short-term happiness. Keeping this in mind will assist you in improving your habits.
Bonus Money-saving Tips For Indians
You may wonder why you should pay a yearly premium when you’re in good health. What if you need money urgently tomorrow? What if you have an accident and are taken to the hospital, for example? Any good medical facility would charge you through the roof.
The sooner you start saving, the less it will seem to invest later. Over time, however, this can have a magnifying effect on your returns. There are many ways to cut your living expenses you shouldn’t ignore. Other innovative ways to save money while living in India include:
- Instead of Postpaid plans with your mobile network provider, prepaid plans should be used.
- Shop online (take advantage of incredible deals and discounts on e-commerce days such as Black Friday, Valentine’s Day, etc.)
Why Indians Should Save More Money
Some of the reasons why saving money are important are as follows:
Making the Right Investments: You may be able to supplement your savings by investing in stocks, bonds, or other financial instruments. These investments may earn you more money in the long run than simply keeping the money in your bank account.
Building an Emergency Fund: Saving money can help you build an emergency fund so that if something unexpected happens, such as a car accident or a severe illness, you will have enough money to cover the medical bills and other expenses. This should be at least three months’ worth of your current income to cover bills and other expenses in case of a job loss or medical emergency. If you do not already have one, now is the time to start.
Look for Fun Ways to Save
Finding fun in simple things and using it to save will take out the drudgery in saving. When you make savings fun, rather than spending large on fun things, you will definitely save money from all the luxurious yet unaffordable wants. It may also get you over your FOMO or fear of missing out since you will also be basically experiencing the same things as other people, just in a different method.
Save for Education, Home Purchases, and Travel:
Saving money can help you pay for education costs, home purchases, vacations, and other expenses that may arise during your lifetime. Paying for your children’s education can be difficult, but it is necessary for their future success. It may also help them find good jobs when they are on their own later in life. Retirement Security: Having a retirement fund is another reason to save money. Having some retirement savings gives you peace of mind and allows you to focus on other aspects of your life.
Related: 11 Great Ways to Save Money Without a Bank Account
Because money is something you will always need, you must always plan ahead of time to ensure you have enough. A large sum of money is sometimes required to achieve significant goals, such as buying a home or paying for college. Set specific financial goals and work toward them to ensure you have enough money to do these things.
The sooner you start saving money, the less likely you will face a financial crisis. If you save and invest wisely, you may, according to FIRE blogs, be able to achieve financial independence — that is, have enough money to live on for the rest of your life. These are only a few ways you can save money in India. You can find many more online with a bit of research.
Frequently Asked Questions
Q: How Do I save money from my salary?
People ask if you can loose money in a savings account. It is hard especially if you went for a trusted savings account. You can save money from your salary by depositing it in a savings account and then investing it in a good scheme such as Mutual Funds, Fixed Deposits, etc.
Q: What are the Best Ways to save money in India
The best ways to save money in India are: to limit online shopping, open a profitable savings account, have a strong budget, and cut back on expenses.
Q: How much should I save each month in India
At least 20% of your income should be set aside for savings. Meanwhile, another 50% (at most) should go toward necessities, with the remaining 30% going toward discretionary items. This is known as the 50/30/20 rule of thumb, and it is a quick and easy way to budget your money.
Q: How much money should I have saved at 40 in India
You should have more than 4.30 crores by 40 if you follow the right steps to achieve financial freedom. It means you’ll need 14.40 lakhs per year to maintain your standard of living. Saving will not get you there unless you start investing in profitable financial products right now.
Q: What is the average savings of an Indian
The average savings rate of Indians is 29%. The domestic savings rate of 29.3% at the end of 2022 was higher than the global average of 26.9%. According to the Reserve Bank of India, financial savings increased from 45% in fiscal 2016 to 52% in fiscal 2021, while physical savings decreased from 55% to 48%.
Q: How much is a good saving in India?
A good saving in India is 30% of your earnings. Many experts say this is enough to survive in an uncertain world like ours. For example, if you earn Rs 1 lakh per month, you should save at least Rs 30,000 per month.