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Nowadays, everyone wants to secure their future by saving a portion of their salary. But as soon as the salary arrives, the list of expenses begins – rent, bills, EMIs, shopping, and lifestyle extravagances. The result? Savings plans fail even before the salary ends. If you’re wondering how to save money from salary, you’ve come to the right place. In this blog, we’ll explain in detail how you can save a significant portion of your monthly income without compromising your lifestyle. Here, you’ll find practical budgeting tips, financial planning hacks, and mistakes you should avoid.
Why Saving Money from Salary is Important
Saving from your salary isn’t just a habit, it’s a necessity. Spending solely for the present will compromise your financial security in the future. Savings are crucial for emergencies, health issues, job loss, or retirement. Therefore, the question of how to save money from your salary is crucial for every salaried individual.
1. Create a Realistic Budget
The first thing you need to do is create a realistic budget. Because unless you know where you spend your salary and how much, you can’t accurately calculate your expenses.
- For this, you’ll need to enter your total monthly income, which is how much you earn each month.
- List fixed expenses (rent, EMI, bills, etc.) separately.
- Keep variable expenses (shopping, entertainment, food, etc.) within limits.
Only by making a proper budget will you be able to know how much it is possible to save from your salary.
Example: If your salary is Rs 40,000 and fixed expenses are Rs 20,000, then out of the remaining Rs 20,000, you should save at least Rs 5,000 – 8,000.
2. Follow the 50-30-20 Rule
This is a financial rule that teaches you how to save money from your salary in a structured way.
- 50% salary = needs (This means that you should use 50% of your salary to pay house rent, all bills, food expenses, and loan EMIs.)
- 30% salary = wants (You should keep 30% of your salary for shopping, watching movies, and your lifestyle.)
- 20% salary = You should save approximately 20% of your total salary for savings and investments.
By following this rule, you will be able to balance your spending and savings, and live a good life.
3. Save Before You Spend (Pay Yourself First)
Most people make the mistake of spending their salary as soon as it arrives, and keeping the remaining amount for savings. But you should avoid this at all. What you should do is, when your salary arrives, first withdraw your savings and investments, and then make other expenses.
Example: Let’s assume your salary is ₹50,000. When your salary arrives, the first thing you need to do is deposit 20% of your salary, or ₹10,000, into your savings or investment account. Then, you can spend all your expenses.
4. Automate Your Savings
No matter how much discipline you maintain, overspending is bound to creep in. That’s why automation is the best trick for saving money from your salary.
- Set a standing instruction with your bank that as soon as your salary is credited, a fixed percentage will be transferred to your investment account, such as mutual funds, etc.
- This will save you time to think and your savings will happen automatically.
5. Cute Down on Unnecessary Subscription
These days, everyone has OTT, gym, app, and membership plans that they probably don’t use. These add up to an extra expense of between ₹500 and ₹2,000 per month. Review your subscriptions and cancel any that aren’t essential. These small changes can significantly boost your savings.
6. Use Cash or UPI Instead of Credit Cards
The habit of spending with credit cards is the main reason for overspending. Because whenever we spend with a credit card, we don’t realize how much we’ve spent. This increases our expenses. If you’re genuinely wondering how to save money from your salary, try using cash or UPI payments. This way, we won’t be able to spend as much.
- Whenever we spend money in cash, we experience a different feeling of spending and fear that we might run out of money, but this doesn’t happen with credit cards.
- If you spend using a credit card, two additional expenses—credit card charges and interest—add to your expenses.
7. Cook at Home Instead of Eating Out
Many people have the habit of eating out at a hotel every two or three days. This significantly increases your expenses. And if you feel like you’ve planned everything, yet you still can’t save money, then eating most of your meals at home will save you a lot of expenses. And invest the money you save.
8. Trach Your Expense Daily
Whenever our salary arrives, we tend to squander it on unnecessary expenses. Therefore, unless we track our daily expenses, we can’t figure out where we’ve spent them. Therefore, you should either use an expense app or an Excel sheet, or you can simply write down your daily expenses in a notebook, but it’s crucial to have the data. This will help you identify unnecessary expenses and help you cut them.
9. Build an Emergency Fund
A portion of your savings should go into an emergency fund. This is crucial in case of a medical emergency, job loss, or urgent need. If you have an emergency fund in such a situation, you won’t need to take out a loan, otherwise you’ll have to.
Expert Advice: You should have enough money in your emergency fund to cover your household expenses for at least six months if you face any difficulties.
10. Invest Smartly
When we talk about savings, everyone does it in their own way. It’s not enough to simply save, but it’s also crucial to invest that money so that its value continues to grow. If you don’t invest, inflation will cause it to lose value.
- Mutual Funds: If you don’t know the stock market and want to invest your money in it, you can do so through mutual funds. This means you can invest a small amount of money every month in mutual funds through a SIP.
- Stock Market: If you have good knowledge of the stock market, you can directly select a stock and invest your money in it.
- Gold: If you don’t want to take risks, you can invest your money in gold.
- Real Estate: You can also earn good returns by investing in real estate.
Investing can multiply your money exponentially over the long term. This is the most powerful step in how to save money from your salary.
Common Mistakes to Avoid While Saving Money
- Change your mindset from short-term money-making to long-term investments and plan for the long term.
- Don’t delay starting to save from your salary. Start working on this plan today.
- Lifestyle inflation – Avoid unnecessary expenses as your salary increases.
- Pay your credit card debt on time. Don’t delay. And if you have any loans, repay them on time.
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Saving money from your salary is a habit that strengthens over time. When you save regularly, you gain financial security and confidence. Imagine facing a medical emergency or losing your job today, and having zero savings. You’d immediately have to take out a loan, use a credit card, or borrow from family and friends. But if you’ve built a strong savings and emergency fund, you can solve your problems without worry. Therefore, developing strong financial discipline and saving from your salary is a necessity for every individual.
FAQs on How to Save Money from Salary
Q1. What is the minimum amount you should save from your salary?
Ans: At least 20% of your salary should be saved.
Q2. What is the best way to save your salary?
Ans: Create a budget, automate it, and follow an investment plan.
Q3. How can you control overspending on your salary?
Ans: Avoid credit cards, use expense tracking, and limit your wants.
Q4. Why is an emergency fund important?
Ans: It’s a backup for loan losses, medical needs, or urgent initiatives.
Q5. Where should I invest my salary?
Ans: Mutual funds, stock market, gold, real estate, etc.
Conclusion
If you haven’t started saving properly from your salary yet, now is the best time. With a little planning, budgeting, and discipline, you can achieve your goals. Now you know how to save money from your salary with smart and practical tips. Simply put this app into your life and take a strong step towards financial freedom.