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7 tips to save money in 2010

Last updated on: January 5, 2010 10:24 IST

Photographs: Uttam Ghosh Investmentyogi

Do you want to save more but feel helpless about your spending habits? It is a dangerous situation as it may lead to debt and keep you away from meeting your financial goals. The following simple tips can help you rein in your spending and take control of your finances.

Create a budget
Spending without knowing how much you are spending and where is the first sign of a problem. Making a budget doesn't necessarily mean that you spend less, either. What it helps you to do is understand your spending patterns and focus on the priorities.             

Follow these steps to create your budget:

  • List out all the fixed monthly obligations like EMI, utility bills and monthly membership fees, etc and pay at the beginning of the month.
  • Keep aside a small percentage for emergency fund.
  • Think of the target saving amount for this month (including the amount you want to invest). These amounts should be put into savings and investments at the beginning of the month.
  • Subtract (1+2+3) above from your monthly take home (after tax) earning. This is the amount left for eating out, movies, clothes, partying etc.
  • Since your disposable amount will be limited you can try and keep a check on entertainment and other expenses.
  • Maintain a log for the expenses of the month and review it at the end of the month.
  • If you see problems in meeting your savings, investment objectives or if entertainment, luxury expenses are too much, change the allocation.

Set a goal
Have you seen small kids saving money in their piggy banks for buying their favourite toy? Most children do so which is also the first step towards goal setting. Our psychology remains the same even when we grow up. Once you set some goals and write them down, saving for it will come naturally to you. Therefore think of realistic goals which you want to achieve like buying a car, house, vacation, cruise or giving some expensive gift to parents, spouse. Then you can start saving for them consciously. is a one-stop personal finance website which helps in managing finances, investments and taxes through services like financial planning, online tax filing, budgeting and 'Ask the Expert'.

Self-discipline is the key

Creating a budget is not a solution in itself. The key is inculcating self-discipline. When you allocate funds for bill payments, savings and investments, there may be little left for spending on other activities. But sticking to this plan may require a lot of self-control and discipline. You also have to think where your priorities are.

Cash is king
One trick to help you to control your spending is to pay for everything in cash. Try to avoid paying by credit cards as it become s a habit difficult to control. Paying cash helps you realize how much you are truly spending, so you tend to spend less. Other alternatives are debit card, online transfer or cheques. When the money goes out of your account you tend to be more careful about your expenses.

Think out of the box
When it comes to gifting or impressing our friends/ relatives we tend to splurge. But there can be many other ways to spend less but still impress. For example gifts should be chosen in way which touches someone's heart and need not be expensive...something which shares memories and experiences. Similarly it may not be necessary to have dinner at expensive restaurant. Having a great time is more about making the other person comfortable and making the time spent memorable.

Vacation on a shoestring budget

Photographs: Dominic Xavier

There are many cheap and alternate ways of going for a vacation which are more fun and memorable. Try camping, adventure tourism or just backpacking with friends. It eliminates two of your biggest expenses viz hotels and travel. India is full of trekking trails, natural beauty and wild life. Explore these locations city and get going. Such trips are also a great way of learning more about our country.

Be a bargain hunter
Whenever you need to buy some big ticket items like accessories, electronics, flight tickets, etc keep these simple rules in mind:

  • Stay away from impulsive purchase. Modern retail stores are designed to tempt you make you spend at the point of sale.
  • With your coveted item in mind start looking for suitable SALE or bargain. Patience can be a virtue here and help you save some money.
  • Try online shopping. There are some extremely good deals available at many e-commerce sites.
  • Last but not the least try online search for the best deals.

May the New Year be truly prosperous for you!