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Earning More and Saving Less: Here’s What You Need to Do
Posted on Friday, July 15th, 2022 | By IndusInd Bank
Did you recently received a raise? Congratulations! However, are you baffled by the fact that you are saving even less than before? It indicates that your savings plan has some loopholes. Needless to say, you need to address this issue as soon as possible.
The fact is, people usually do not increase their savings percentage as their income increases. It can only be fixed if personal budgets are correctly adjusted. To solve this issue, you must first understand what is causing it and why you are saving less.
Going Above and Beyond Means
Earning more doesn’t imply that you need to spend without sticking to a budget. Saving and investing are essential aspects of living an economically balanced life. Inevitably, our desires develop as our income increases, but having control over these desires is crucial to save more.
Increasing Credit Card Spending
One of the main reasons people save less when their income goes up is because they tend to spend more.
If you want to start saving more, you need to be aware of your spending patterns and find ways to curb your spending. One way to do this is to set a budget and stick to it. This includes checking how much you spend with your credit card.
Investment is Being Overlooked
Another reason people save less is because they start overlooking investment opportunities and instead spend more.
For instance, if you received a raise, you may feel like you can now afford to buy that new car or house. However, in the long run, these investments may not be as wise as you think.
It is important to remember that it is important to save for rainy days. A good way to do this is to set aside a portion of your income each month and invest it in a solid investment plan. This will ensure that you have a cushion saved up when your income inevitably decreases.
Investing in mutual funds, stocks, shares, and initial public offerings (IPOs) are a few excellent strategies to build your wealth.
Not Tracking Your Expenses
Tracking your spending is equally crucial for great savings. Knowing where your money is going can help you analyse your finances. Start bby analysing your bank and credit card statements and keeping a spreadsheet of your expenses. It will help you in maintaining track of your finances and achieving financial independence.
Taking Out Loans Unreasonably
Another common reason people save less is that they take out too many loans. This can be a very dangerous cycle, as it can be difficult to get out of debt if you keep taking out more loans.
Understand that loans indeed come with a long-term obligation that must be met; as a result, using them only when essential is the prudent thing to do. Personal loans, for example, have enticing offers and are readily available from any bank. However, this loan should only be taken out after careful consideration to maintain a healthy financial situation.
Conclusion
As your monthly income increases, it is imperative for you to increase the number of funds you save every month as well. This is essential for your financial growth and hence, must not be overlooked. An easy way to develop a habit of saving money is to open a savings account. You can easily set aside a particular percentage of money every month and use it to invest in some profitable options. The aforementioned points highlight a few ways to ensure the same.
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
