Save Smart - and Stay Safe!


Mrs. Gayathri Ranjit
Senior Lecturer, Operations & Systems
TKM Institute of Management
Kollam, Kerala

"All days are not same. Save for a rainy day.
When you don't work, savings will work for you."
                                                                  - M.K. Soni

The irony is that while money is responsible for only a small piece of your overall happiness, it can rob you of happiness completely. Of course, you can lead a happy life provided you learn to control your hard-earned money.

M-O-N-E-Y  C-O-N-T-R-O-L….some reality bites

* The more control you have over your finances, the fewer money stresses you have (and less stress of course translates to more happiness!).

* Many things about money are beyond our control, But a lot is within our control.

For eg. while you can't control the markets, you can control how much you invest. You can't control the company you work for, but you can choose to save some amount of cash and get a good night's sleep even if your industry is hit by layoffs.

* Poor financial control can OR rather will lead to a catastrophe.

In this article, you will look at what to do when things (read "debt", "income", "savings", "spending") start going off track and how to take the stress out of managing finances.

A few smart tips for smart savings and a happy living,

1. Get "Organized"

Imagine your living space as a chessboard (now now, pl don't think of every square-just the 4 important ones- name these Income, Spending, Debt and Savings). These are the areas you need to focus on if you want to make money and grow your net worth. Your living space should be clutter-free and organized- a place that makes you feel you are already rich!

To reduce clutter, get rid of old receipts and brochures; set up a simple filing system - one folder for investments, one for insurance policies, another for credit cards; pay your bills as they come in rather than stockpiling them until the end of the month. In other words, "Get Organized".

2. Use your common sense to spend "sensibly"

If you have trouble living within your means, you need to understand the specific items thinning your wallet. Once you have identified them- whether they are car payments, restaurant bills, mobile phone charges or too many birthday gifts- you can make changes. Spending no more than you can afford is absolutely essential to financial control.

3. Minimize "Debt"

Having a very low level of total debt (including mortgages, car loans, home loans) does not necessarily make us better off.  In today's economy, affording a house, or undertaking an extensive home renovation, means taking on some debt.

Credit card debt however is different. If you've borrowed so much that you have trouble making the payments on your monthly cards, stop spending and stop borrowing. It's as simple as that.

4. Save "Around" (read "At least") 5% of your Income

The easiest way to save is to get that five percent out of your hands before you have a chance to spend it. Arrange to have money taken out of your pay packet and tunneled directly into your savings. Or join a good mutual fund scheme's systematic investment plan that takes five percent from your savings account each month and deposits it into savings- could also look into a tax-advantaged plan.

Once you find you can save 5% of your income, the accumulation in your accounts will boost your confidence to do more. Increase your contribution to 6%, then 7 or 8, until you are really putting away enough to fund your future.

5. Work towards your Goals

Visualizing what you want is the first step in setting goals. Think big, but be as specific as possible. Setting a goal of 'buying my first house soon' is too vague. Deciding "I want to buy a 3-bedroom house within 30 minutes of my office before my 30th birthday" sounds better! Write down your financial goals, then figure out what steps you need to achieve them. Break them down into manageable parts.

Eg; if your goal is to saveRs.50, 000 next year, seeing all those zeroes may seem daunting. But saving Rs. 955 a week to arrive at that looks simple right?

6. Don't keep wanting more

The more you have, the more you want; & the more you want, the more you lose.

This is because wanting more doesn't breed contentment, it only breeds more wanting. People who want more believe that money buys happiness, as well as independence, security and control. The irony is that these people have given money the power to control them.

It is very important to remind yourself that control doesn't depend on how much money you make. It depends on how you handle the money you have.

The Six, Simple, Saving tips you have seen so far rely on the 3 Money Management Mantras viz. Planning, Organizing and Saving.

As B Franklin rightly said "A penny saved is a dollar earned."

So, if You want to take charge of your financial destiny, go ahead……..

Save Smart and Stay Safe!!

Mrs. Gayathri Ranjit
Senior Lecturer, Operations & Systems
TKM Institute of Management
Kollam, Kerala

Source: E-mail January 25, 2011


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