These days many a times we hear people saying that “My savings are almost nil”, “My salary evaporates in first 10 days of month”, “I don’t know where my money is going”.
I think right now in current times we have lowest savings rates and we don’t know what to do or many times we even don’t realise that we are saving absolutely nothing. In current world of jobs where we are financially dependent on our employers and our no of years of employment are also fixed then it is very important that we have good savings with us to meet any crisis & our post retirement life which gets affected by rising inflation as well.
To begin with, best thing to do is to document our expenses. If you can’t do daily then its fine but do monthly. Atleast figure out which are the fixed expenses that you incur monthly these are the ones which whether you earn or not you will have to Pay. Figure out which are the expenses that are variable, costs of these expenses vary. Note down all such expenses with monthly cost incurred on them. Then extrapolate that cost as annually, 5 yearly & 10 yearly. I am sure you will get stunned looking at the huge amount we are spending on these items over 5 to 10 years.
Remember Saving happens over the period of time, you cannot have huge money in short period of time (unless lottery or some wrong business). Figure it out which are the avoidable expenses, which expenses you can reduce & take action on those. I have prepared one table with expenses extrapolated for 10 years. You can also prepare such table with relevant items & see the amount over period of time.
Now observe, out of your list, how many you can easily avoid, how many you are incurring because of your lethargy/ignorance. If you see whatever we are incurring as routine, is actually eating out lot of our money over the period of 5 to 10 years. Also notice that how many of these items were relevant before 10 to 15 years, how many newly got added. If we observe such items are increasing with every passing year. I have left few rows blank as values could be too variable & depends individual habits.
Even for our groceries, food, for so many things we just go to market and buy ready-made items. Our ancestors used to prepare most of the things at home. Still in rural India people prepare lot many things at home Ex- Pickle, papad, chutneys, masalas, chips, various snacks etc. So many things are prepared at home & it saves good money.
Can't we wash our own car? Can't we wash our own utensils? How many phones we need, how many gadgets. If you see these companies will keep bringing on newer versions of electronic goods, how much money we can spend on it. These companies are so big today mainly due to our lethargy/bad habits/succumbing to euphoria to own these gadgets.
If we see, we are living like kings/queens but we need to remember that we are common people and every common person cannot afford to live like king. When common people start living like King for sure they are going to go Bankrupt!
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