Financial crunch: How to save more!

It's the festive season but it's also recession. You are not the only one thinking it. Every time you think of buying a present or a New Year's ensemble, you feel like pinching pennies.

It won't hurt to live a little but you could do a little saving too. We show you how to save that little extra from your salary without feeling the pinch.

Set an Annual Figure

There are two ways to increase your savings. The first way is decide a certain percentage of your income that you will put into savings every month. For example, if you are earning Rs 50,000 per month and you save 30per cent of your salary, you can increase the amount you save by 5 per cent.

Analysis is the key to investing the right way.

However, if you are earning about Rs 15,000, you would find it difficult to save 30 per cent of your salary. In such a case, the second method would suit you better.

You will need to set an annual amount that you will save. Say you set an annual amount of Rs.40,000, you can save about Rs.2500 every month and then put away salary bonus that your company gives you during festivals like Diwali or performance bonus too.

This method is more flexible but also difficult to stick to because when extra money comes in you feel like spending it on a shopping spree.

Dr Uma Shashikant tells you how to handle your paycheck

Direct Debit Works

If you are the kind who spends money the moment it is in your hands, direct debit is the safest way to increase saving targets.

The simplest way is through a Systematic Investment Plan (SIP). You can put aside anything from Rs 500 to Rs 5000 into-

• Mutual funds
• Recurring deposit in your bank
• Postal savings scheme

The idea is to follow a certain investment plan every month.

PAGE_BREAK

Increase Provident Fund

If your company allows you to choose whether or not you want a provident fund, always go in for the provident fund. It is a good way to ensure a small saving every month that will work well for you later on.

Also if they give you the option of choosing your contribution to the provident fund, you can choose to put 20 per cent of you salary instead of the amount that is stipulated by them.

Start Simple

Here are some simple day-to-day things you can do to increase your savings, slowly but surely.

• Follow this simple formula for managing your cash flow. Income - Investment - Expenses instead of Income - Expenses - Investment. It will make a world of difference to your finances and savings.
• You could choose a scheme for your mobile connection that suits your usage pattern. For example, if your job requires you to travel out of town frequently and your company pays your bill only up to a certain amount, you could do with a scheme that has lower roaming rates.
• If you travel everyday to your workplace by taxi, you might want to take stock of your travelling expenses. It might work out cheaper for you to buy a medium budget car.
• If your salary goes up by 10 per cent, you can't spend the entire hike. You can keep 5 per cent for your own entertainment and 5 per cent should be saved.

(With inputs from Ameet Patel, Partner, Kanu Doshi Associates, Chartered Accountants and Kartik Jhaveri, Financial Advisor)