My Personal Finance Story: Savings for a Middle Class Income

When you come from a middle class family, the only time you would hear the word “Savings” is due to the lack of it. I come from a family where both my parents had to work hard to make ends meet. The focus primarily was on having the basics first and then save. Growing up, I saw the struggle my parents had to go through to raise us in a matter that was considered apt for the society. My sister and I were put in the best of schools and colleges and were given the best education possible. When I turned eighteen, I decided that it was time that I took atleast my expenses on to myself. I started doing promotional jobs during weekends and holidays and thought that to be easy money. Once I finished college and joined a Corporate job, I understood how difficult it is to make money. A regular monthly income guarantees security, but I wanted something more than that. I wanted my money to work for me today and tomorrow. No matter how small the amount is. But unfortunately I had no one to guide me regarding the right use of my income and how I can have some savings. Instead of waiting for someone to come teach me, I decided to figure it out myself.

As soon as the monthly salary was credited to my account, I wrote down my expenses. Instead of planning amount spent per day, I gave myself a miscellaneous budget to get past the month. I created another account within the same bank and started transferring a fixed sum of money every month as emergency money. It was tough initially to run the month on a tight budget, but as month passed I saw the emergency fund growing and I was very happy with it. I started investing small amounts and I was happy with the returns that were yielded. Dedicatedly putting away some savings and later investing them made me finally stronger and smarter. I do not make a huge salary, but I am content with whatever I get and I know how to make it work for me. These are a few things that have worked for me.

1. Make a list

This is the most important and the first step to saving money. This list would include your rent, bills, groceries and other household expenditure. Calculate the increase or decrease in the amount every month and see how you can control it. These days there are many apps available that help you manage your expenses and let you know where you are spending more. Initially I used to write down the expenses of each day and know where my money is going. But now I have all the data on my phone within an app.

2. Pay your bills

It is always better to pay your bills at the start of every month as soon as you receive your salary.

3. Put aside a chunk of money as savings

Every month put aside atleast 20 – 25% of your salary as savings. It need not be a huge amount, but you need to make a start. Try to keep the amount constant or increase it per month. Never decrease.

4. Make investments

It is sad that people only make investments inorder to avoid tax. They do not realize how it can work to their benefit. Take up an insurance plan after reading all the terms and conditions carefully. Start small. Always.

5. Have liquid cash

Savings is good, but if you are depositing it in a fixed deposit then it is better for you to have another savings account to have money that can be used during emergencies. I call it the emergency fund. Incase of a medical complication or unexpected expenditure, this money will come handy. Agreed you will have medical insurance and all that but not all ailments can be handled in a cashless manner.

6. Do not pile on credit card debt

Credit cards are awesome since they let you buy stuff when you do not have the money. But the interest rates at which they come is scary to say the least. Pay your credit card bills on time to. If you have to choose between sending money for savings or paying credit card bills, do the latter. The rate of interest you end up paying is much higher when compared to what you make while saving.

7. Beware of loans

As much as it is convenient, loans are a lucrative bait. With the rate of interest they come with, you end up paying almost twice the amount you started of with. Choose a lesser tenure and finish your loan in the shortest duration possible.

8. Be realistic

Everything here sounds easy, but is easier said than done. It is very hard to make money and it is even harder to save it. You need to be very strict with your spendings and be smart. Do not set unrealistic expectations of savings lakhs within a short period of time. Set realistic goals and take baby steps towards saving.

These are a few things that have worked for me beautifully. Thanks to these, I do not have to compromise on my basics or give up on my wants. Smart planning helps me indulge in luxury once in a while without burning a hole in my pocket. Nobody taught me this. I learnt them myself with a little effort. Its not hard, but not easy either. But if it guarantees a better tomorrow, I’m prepared to walk that extra mile.

Soumya Prasad is a techie during day and a passionate writer by night. A fashion addict and a closet baker, apart from writing she spends her free time travelling and baking yummy cakes for her foodie husband. Rhymed poetry gives her satisfaction and she is looking forward to publish her own novel someday.