Saving money is difficult. I have to agree with you. For the first few years of my job, I had NOTHING left in my bank account. A completely empty bank account at the end of every month. For a guy earning a decent paycheck, that’s a sad thing to happen! I didn’t seem to value all the hours of my life I put in for work.
It was time to take the control back now. All of the things I describe happened very coincidentally. But hindsight helped me understand what worked best, what didn’t. Let’s get working then and help you get set up.
Before we can begin, you’ll need the following details of your two bank accounts from the first post in the personal finance series:
- Bank names for both your bank accounts
- Both the bank website details and/or official mobile apps
- And the login details
Take your time, the blog’s going to stay here. Got it already? That’s great. Let’s move on then! As I did mention before, you’ll understand the importance of having these two bank accounts very soon!
Let’s start saving money already
To know what you can save, you need to know how much you spend. Below are 4 quick steps to start saving your money!
- What’s your monthly pay?
- What are your fixed expenses? Round those up to the closest upper limit.
- Include your monthly travelling costs, any other amounts that you spend and add them up
- Add the amounts from #2 and #3. These are the amounts you can automate.
Write the details down. You will need it.
Take the below example now:
- Your monthly pay is INR 30,000
- The fixed expenses come up to about INR 20,000
- You need close to INR 5,000 to manage your travelling and daily expenses while you go to work
- You have INR 25,000 as expenses that you will spend every month, and 5,000 which are left out of your monthly paycheck for anything else.
Now, remember we also mentioned that we need to round up amounts. So if your phone bill per month ranges between INR 250-350, you count that as INR 400 or 500. This gives you a buffer in case you have a higher bill in a certain month and also gives you money to begin saving, which would otherwise be spent. You do the same for all other bills.
I’m sure already get an idea of where I’m coming to. By this simple trick, I started saving more than INR 2,000 to 3,000 a month which I always thought wasn’t possible with my expenses.
Easy, isn’t it?
The Final Steps to Saving Money
That was a lot of reading, but it will be well worth it once implemented. We’ll begin with doing it manually but will make it all automatic very soon. Now, you can start with manual steps to understand what exactly is going to happen later, and decide if you want to automate it or not. I’d highly suggest automating as it removes human emotions and thoughts. But you decide it better.
What we’ll be doing is, taking the total expense amount that you calculated in #4, and simply transferring it to your second bank account (which you collected the details for at the beginning of this post) as soon as your salary is credited.
Now the bank account where your salary is credited, will always have leftover amount which you can just keep as you’ve transferred the expense amount to your second bank already!
Anytime you need to pay for things which you’ve already accounted for, you only pay using your second bank account. That bank account stays only for the accounted expenses. NOTHING MORE, NOTHING LESS. At the end of the month, you will automatically have money left which would have been spent otherwise!
You see, this is a very simple trick which I slowly taught my 16 y/o brother, and he started saving a lot of his pocket money without being cheap at all!
In the next post, we’ll go over automating this process so your bank accounts do the transferring and bill payments automatically. You just end your month with higher bank account balances compared to previous months. It’s easy, and very convenient to begin saving money when you have a super cool system to do it for you!