Right from the time you wake to the time you hit the bed, we believe you spend some money be it on coffee, takeaways, groceries, beauty products, clothes, apps, gifts, travel plans and the list goes on. And add to this you monthly bills like the Netflix subscription, gym membership, rent, credit card bills, loans, etc. So you feel it’s a miracle if you find any left in the bank account at the end of the day. Though you may reason that this is your way of living your life on your own terms but trust us having no savings for a rainy day is no fun. Where would you get the money from for a medical or any other kind of emergency? Credit card isn’t the solution, you will rack up expensive credit card debt to pay later. But the good news is saving money isn’t as difficult as you think. You just need to manage it well. To help you get better with your finances, we chatted up Hena Mehta, co-founder and CEO of Basis, an app-based platform that helps women sort their finances through knowledge boosters, supportive communities and expert advice. She lays down simple ways to begin money management.
Get your money’s worth!
Money goes beyond what we all think. It is not just about netting up expenses but savings too. “Your money needs to make money for you. If you want to reach a particular financial goal, how much will you have to save? For how long? What is the percentage growth on that? These are some good questions to get started with!” Says Hena.
You need to understand that saving money is different from investing it. Investments help your savings grow. Don’t let your money sit idle in your bank account. Make it work by investing it in instruments you are comfortable with. “By not investing your money for inflation-beating returns, you are actually getting poorer. The value of money goes down in time because of inflation and you should be able to grow your funds at a rate that you can beat inflation, so you can continue to afford things you like in the future,” advises Hena.
Don’t let your finances control you
If you don’t plan for your income, you will end up overspending or spending on unnecessary things. Whether you are earning ₹20,000 or ₹2,00,000 a month, without systematic financial planning, it can all blow up in a puff of smoke. Hena lists effective ways in which you manage your salary better.
- Pay off your credit card bills in time, do not let them accumulate.
- Ensure your investments move out of your account in the first ten days of the month.
- Marie Kondo your money! Ask yourself if a particular expense will spark joy? If not, then you might not need it
Budget, spend and save
Most of us get this wrong when in fact it needs to be budgeting, saving and then spending. Hena offers a solution, she says, “Living a better life doesn’t necessarily mean living a more lavish one. Use the methods given below to save effectively.”
1. Use Budgeting methods like the 6 Jar budgeting method, the 50:30:20 rule or the Kakeibo method, whichever works best for you.
2. Start with setting 3 financial goals, one short term, something that might come up in the next 12 months, one that might come up in the medium term, which is in the next 3 to 5 years and one long term which comes up after 5 years.
Set up an automated process that puts away your savings for you, so you don’t need to remember to do it every month. A systematic investment plan (SIP), is a good option here. By setting up an SIP, your money automatically gets invested into the mutual fund you picked.
Create an emergency fund
We all want to look out for our family, especially during uncertain times. That’s what contingency plans are for. Whether it is your peace of mind fund, retirement fund or career break fund, just make sure that you’re covered in the event of an emergency. “And make sure these emergency funds are easily accessible! E.g. the home you own can’t be your emergency fund, because converting it into cash can take a long time,” cautions Hena.
Get expert advice
This actually helps. Whether it is a session with an expert advisor or attending workshops to help you understand money better, each step is one step closer to that future. Financial experts have seen this all too well and know exactly what you’re going through. By voicing your concerns and talking about your goals, you will be able to invest systematically in the instruments that will help you grow. What’s even more important is having the expert at your fingertips since all great financial decisions are all about good timing. “Basis First is an exclusive service that gives you access to financial experts and master tutors. Get 1:1 advice in sessions with the Basis Coach, stay in touch with your experts with the Basis Concierge and unlock access to Basis Masterclasses,” suggests Hena.