According to statistical data, most individuals spend more when they have more. As a person's income rises, so does his or her standard of living. Wants become needs, and items that were once considered luxuries become necessities. However, this mindset is problematic. It isn’t wrong to enjoy life, but it should never come at the expense of your wealth. If you live beyond your means, you could stare at a financial problem in the future.

How to save money from your salary each month
 

Your income is an essential consideration for deciding how much to save. The amount you make should be secondary to the amount you save for saving money from your monthly salary.

50% for living expenditures, 30% for lifestyle expenses, and 20% for savings is a good rule of thumb to aim for with your monthly salary. However, this rule doesn’t always work. If you save only 20% of your salary to save for a deposit for a house, it will take a long time to save enough money for a deposit. Meanwhile, the other short-term objectives, such as holidays, are completed excluded. Instead, here is a proven way to save money from your salary:

● Saving money should not be difficult. You can set up automatic deposits and withdrawals from your salary account to your investment and savings account. Consult your payroll administrator about splitting your direct deposits between two bank savings accounts.  You can set up a specified percentage or cash amount in a separate high interest savings account, making it much easier to save money from your salary.

● We often fail to monitor our expenditures. Keeping a track of your spending can help you figure how your salary is spent. Examine your spending for the past months and see where you can save more. You can further track all your expenses with the IDFC FIRST Banking App.

● Lodging, food, and commuting are the three budget categories that account for most of our living costs. Reduced spending in these categories will leave you with more money to save from your salary.

● Online businesses have made it easier than ever to spend money. Compulsive buying has never been more difficult to resist. If online spending has been a problem for you, start by ignoring your credit card.

● Do not get pulled into the ‘trends of the time.’ Ignoring peer pressure is the best way to save money from your salary. It is especially true with subscription services such as Amazon Prime and Netflix. You do not need them all. Choose one and let go of the rest.

● Having a long-term goal in mind is also beneficial, as it ensures you are not spending frivolously. If you feel you are not good at saving money, invest in tools such as senior citizen savings account. Also, protect your money with banks such as IDFC FIRST Bank, who offer savings account that earns up to 7% interest per year. This way, your deposit will get deducted from your account, allowing you to save money while at home each month.  

● Set up a 'change jar'. Keep a jar at home and deposit your spare change at the end of each day. Coins and notes that aren’t used can quickly pile up. Once the jar fills up, deposit it into your savings account. Based on your daily spending, this can add up to a few thousand rupees annually.

● Limit eating out. Eating out frequently can burn a major hole in your wallet. Try limiting eating out or getting takeout to only once or twice a month. Cook your own meals and bring food to work so you're not tempted to eat out as often. Preparing meals at home lets you control portions and ingredients, often saving you money compared to restaurant meals. The savings from reduced eating out will quickly add up.

● Avoid shopping as recreation. Shopping for non-essential items as a leisure activity can lead to overspending. The thrill of finding deals and the social aspects of shopping trips make it easy to buy things you don't really need. Keep recreational shopping limited to just a few times a year for specific needs. Avoid 'just looking around' shopping sprees. Shopping mindfully and only when you have an actual requirement will reduce impulse purchases.

● Use credit card rewards strategically. Credit cards often offer cashback or rewards points on spending. But chasing rewards can sometimes encourage people to overspend. Opt for cards that offer the highest cashback rates on essential spending categories like groceries, gas, bills etc. This allows you to earn rewards on regular monthly expenses.

Conclusion
 

Being mindful of where your salary is going, monitoring spending, reducing monthly bills, avoiding unnecessary purchases and impulse buys, and having clear savings goals are key to optimizing your savings every month. Small tweaks in your spending and money management habits can make a big difference in how much you can save from your salary. Consistency is key - make savings a priority every month.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.