How to save more has always been a dilemma to most of us. When it comes to using our income for expenses and investments, most of us follow the equation:
Income – Expenses = Savings and Investments
But is this the right way to do it?
While following this equation, we realise that by the time we reach the end of the month, after meeting our expenses, there is hardly any money left for our savings and investments. Due to this, your financial goals suffer. This is specifically for people who are not disciplined savers and investors.
Hence, we should flip the equation and instead follow this:
Income – Savings and Investments = Expenses
We should make sure that we first save and invest towards our financial goals, and then spend the remaining money towards our regular expenses.
Actionable tip: If your salary gets credited on the 1st of every month, you should give the auto-debit mandate for your mutual fund SIPs, and insurance premiums for the 3rd or 4th of the month. This will make sure your investments are taken care of. You can then spend the remaining income on monthly expenses.
Tell us how it has helped you in the comments.