Today , we will talk about how you can take your savings to next level.
1. Review your expenses and Savings once in 6 months.
You will be able to find out gaps – unnecessary expenses happening, Surplus lying idle in Bank accounts which can be put to better use.
Below is a review done for a client, sharing for your reference:
|DTH Bill for 3 Set top boxes||Rs. 2400 per month||These were mostly not used and same plans were not reviewed since the time it was installed , only 2 are running now with reduced packages and third was already a smart TV, hence not required on that TV||Rs.1100 per month||Savings of Rs.1300 per month|
|Savings bank account average balance of 3 months||10 lacs earning interest of 3.5 -4 %||This amount is lying for past 5 years in savings bank account as emergency fund||10 lacs per month shifted to liquid funds at interest rate of 5-6 %||Additional Interest earned Rs.53000 in 2 years|
|Airtel postpaid plan||Rs.1500 per month||Reviewed and changed to Rs.499 per month with same plan features||Rs.500 per month||Savings of Rs.1000 per month|
|Investing the saved 2300 per month in bank RD for 2 years gives Rs.60000||Total additional income from this exercise Rs.1.13 Lacs|
2. Online Shopping on cash instead of Pre paying.
You can order online from now on on cash on delivery instead of pre paying through debit/ credit card or net banking. I am sure you must be thinking, what difference will it make? I have started doing it and following are the changes I can see. Of course, Prepaid is more convenient.
For working people like us, who will manage CODs and all , however can try and use prepaid to the minimum.
Let me tell you why:
|Most of the times, giving cash from my wallet made me think about the shopping done- was it actually required.
Most of the times answer was NO, it was an impulse purchase.
|While submitting order as COD, there comes a confirmation call – If you confirm the order just placed , press 1 else 2 . My reflex automatically trigerred me to press 2.|
|Eating through Plastic money is way more convenient, however value of money looks smaller when we are not paying hard cash.|
|It pinches to give cash for something that we feel is already there in our wardrobe, already there in our homes and was just bought that time to get instant gratification|
I have saved 8K in last 6 months by following this practice. I can confidently tell this from my past shopping trends which were done as prepaid orders.
If I continue this for next 1.5 Years, I will be saving Rs.32000 and after 2 years it will be worth Rs. 36600 if invested in liquid funds. So, total savings till now is Rs. 1.13 lacs and 36600, remember this till the end.
3. Diversifying in the unknown territory.
Mutual funds are still an unknown territory as 80 % of Indians prefer FD than Mutual funds as they don’t want to enter an unknown territory, but Yaad hai na Mountain Dew ka slogan “ Darr ke aage Jeet hai”
Things are beautiful beyond the comfort zone, so, lets at least give it a try and see if it makes any difference to our wealth.
|FD / RD/ Fixed instrument offering 7% ROI||Mutual funds offering 10% ROI|
|Value at the end of 5th year||3.57 Lacs||3.85 Lacs|
|Value at the end of 10th year||8.60 Lacs||10.07 Lacs|
|Value at the end of 15th year||15.64 Lacs||20.10 Lacs|
|Value at the end of 20th year||25.52 Lacs||36.20 Lacs|
Difference is higher in long run which means this option can be opted for long term goals and part of our investments can go towards Mutual funds as well.
So, by doing just 3 simple changes , we have actually taken our savings to the next level.
What did we gain actually?
So , total savings come out to Rs. 1.13 lacs, Rs. 36600 and 1.47 lacs ( taking 10 year difference) = Rs.2,96,600
Howzatt ! I am sure nobody feels bad if some extra money comes in without any extra work actually.
So, here is wishing all the best that you may take your savings to the next level.
About the author: Gurleen Kaur Tikku is a Financial Consultant and devotes her time to her company www.hareepatti.com. She has done her Bachelors in Finance and Investment Analysis(BFIA) from College of Business Studies(CBS, Delhi) and MBA from IMT, Ghaziabad.. She can be Contacted at [email protected]