Recent hike in Diesel price and LPG cap will bring more difficulties for common man.Government is giving the reason as economic reform, but the truth is we are running out of option.There is no wage hike this year by most company(mostly given excuse is recession), but prices are not going to decrease.
Politician themselves have more facility and even they have freedom to increase their salary by passing a resolution in parliament but nothing like that for us.Seeing this hike seems there will be increase in prices of all essential commodities and result in more monthly budget and cutting our pockets.
So how to save money after this price hike.Presenting 6 best ways from my experience.
- Save any extra income – If you received any extra money except your salary like bonus,gift or extra money for your work, use 1/3rd rule to spend this.Divide the money in 3 parts.1/3 of the money should go to pay your previous/past debts.next 1/3 you can use for your present expenses.The last 1/3 should go to future investments.
- Keep some amount handy in your account – It can be anything like hospital cost for emergency accident,dental cost, or may be job lost.You should keep at least 3 months of your salary always in your account.Never make your account completely empty because of any expenses.Fixed deposit is a good option in which we can break or withdraw money any time.
- Get rid of credit cards – Don’t take any credit card because of some discount and redeem points.More credit card always tempt you to buy and shopping more.If possible keep only one card handy and surrender others.Use debit card mostly to pay your expenses.
- Keep track of your daily/monthly expenses – This is very essential part.Don’t let your money go away unnoticed.you can use notebook, Excel sheet to manage it yourself.Else you can use tools like money manager, comes with a subscription at Icici bank account.It is also available at moneycontrol for people with non icici bank account.It will automatically fetch your expenses from your card and categorize it.Also give your alert if you exceed your budget.I love this tool.
- Start planning your retirement – Its never too early to think about retirement. Specially people with private job have to start planing it as soon as they can.Invest some money separately for retirement, maybe as life insurances and later, reimburse as life settlement.Remember unlike government jobs there will not be any pension, so sooner or later you have to think about it.
- Make your budget and stick to it –Always plan your budget and follow it.No matter how less or more earn, you need to make budget.At the end of month see where you spent more and how it can be reduced.Do this activity diligently and keep tuning your budget.As a normal metric try to follow this rule for your yearly salary:
30 percent: Housing and debt (Loan/rent, credit cards, others loan etc.)
26 percent: Living expenses (food, clothing, utilities, transportation, medical, entertainment)
25 percent: Taxes (income and other taxes)
15 percent: Savings and retirement retirement plans, stocks, mutual funds, other savings, etc.)
4 percent: Insurance (life, health, medical, auto etc.
Remember you need 20 times of annual income you are expecting at the time of retirement.Suppose you need 40,000 INR per month at the time of retirement.Then you need at least 60 Lakhs at the end of retirement.
So start saving today for your future.Remember saving every paisa today will become rupee tomorrow.So start planning for your future and family.Presently I think this is the best way to fight price hike.