Finding difficult to save money? Follow these 7 steps!

Earning well, saving money and investing well are 3 pillars on which foundation of a good financial life can be made. However, lot of people, despite earning well, are unable to save money. One of the reasons is chasing a lifestyle which is expensive. Another reason for this is inability to control impulses and running out of money before realizing that you are out of money!

This reckless spending may manifest in terms of endless impulse buying, taking unnecessary debts and loans, lack of savings and probably financial stress in long run!

Here are some suggestions on steps to save money. These assumes that you don’t have any major loans (barring home loan). In case you have, suggest to pay that off and focus on saving & investing money subsequently.

(Related – Paying off debt versus investing money)

steps to save money

7 steps to save money if you are finding it difficult to save money!

  1. Target amount of cash you want to spend and save. This can be based upon your major expense heads in the month, but allowing for some leisure/ indulgences. But this number should be a non-zero positive number. Ideally at least 10% of your take home salary. For instance, if your take home salary is $5000, try to save at least $500 from it. If you are unable to arrive at this number, some fixed lifestyle costs (e.g. house rent or cost of commuting) need to reduce.
  2. Automate your savings/ Investing – Say you get your salary on first of a month,  invest he target savings amount immediate (e.g., by 5th of the month). This can be in an account that can be automated. E.g. bank recurring deposit, or a mutual fund SIP (systematic investment plan). Avoid manual intervention as far as possible, as there it requires a good amount of financial discipline to begin with!
  3. Keep only your basic monthly expenses in your bank account. Get your expenses to fit that. It might be difficult to implement initially, but have no exceptions barring any emergency.
  4. Put more money in your inaccessible investment account – E.g. max your PPF/ contribute more to your provident fund voluntarily. Or transfer to another bank account which you can’t easily access (say, not without going to the bank branch). A caveat though – You need to provision for an emergency fund before putting money in an “inaccessible” account.
  5. Enroll help of someone you can trust. This can typically be your parents, siblings or a close friend. Give them some cash for safekeeping. Ideally they need to be staying close by so that this fund is accessible easily, whenever needed.  Before that, ensure they are not reckless spenders, as they are unlikely to have an impact on your spending in that case!
  6. Dump the credit card. Or keep it out of your immediate reach (enrolling help of a trusted person, as in above point can be helpful).  Delete your credit card details from websites where you have saved them. Use cash or debit card for your day to day transactions.
  7. Do this for at least 3 months. That would be the minimum it will take to form a habit. Then do it for few months and let it become a part of your habit! (Easier said than done, but then, if saving money is your goal, then you need to be consistent with this habit). Once you have successfully done this for some time,  try to identify more areas where you can optimize. Remember, above steps were the suggestions for starting point – and not probably the most efficient way to save money. This you’ll need to figure out yourself and see what suits best for you.

Few assumptions

  • You have a decent source of income, not any mandatory major expenses (e.g. major health issue in family). Most probably your spending habits are the reason why you are unable to save money.
  • You don’t have budgeting practice and it might be impractical to suggest creating a detailed budget and sticking to it. This is more behavioral than financial. So, I am suggesting to set a broad overall budget, rather than a detailed one.
  • Complete behavior change may not happen at one go. A part of this needs to be forced discipline (e.g. by making money inaccessible)


Have any more tips on steps to save money?

Do share!


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