Investment Insights

Financial Success: 24 Simple and Powerful Money Saving Tips for 2024 – By Ankur warikoo sir

On the 24th of January 2024, not all rules for saving money need to be followed. What one prefers, one should do. The 50-30-20 rule is a very common rule where you divide your entire month’s income into three parts: 50% for your needs, such as rent, EMI, electricity, water, and food; 30% for your wants, like phone upgrades and parties; and 20% for savings and investments.

Money Saving Hacks for 2024
Money Saving Hacks for 2024

Rule number 1, when you receive your salary, allocate it according to the 50-30-20 split. After that, any increments or extra income you earn should be divided: 20% for your needs, 30% for your wants, and 50% into your savings and investments. This ensures that your needs are covered, you have some discretionary spending, and a significant portion is saved and invested for the future.

Rule number 2, the 24-hour rule, suggests waiting for 24 hours before making impulse purchases. If after this time you still feel the urge to buy, go ahead. However, most often, after 24 hours, you realize that you didn’t actually need that item, and the desire fades away.

Rule number 3, the 72/730 rule for expenditures, is an interesting one. Before buying anything, divide its cost by 72. If it still seems reasonable after 72 uses, go ahead. If it’s something you use every day, like a phone, divide the cost by 730 (the number of days in two years) to evaluate its daily worth.

Rule number 4, the 30-day savings challenge, involves cutting off non-essential expenses for a month. Cancel random subscriptions and evaluate what truly matters in life. This exercise often results in not only saving money but also gaining a better understanding of what brings true happiness.

Rule number 5, the five-year rule for major expenses, suggests questioning the validity of a purchase by asking whether it will still be valuable for you after five years. If not, reconsider the purchase. This helps in avoiding unnecessary big expenses that may seem important in the moment but lose significance over time.

Rule number 6, my favorite rule, is the “Pay Yourself First” principle. It suggests that the savings you allocate at 20%, as mentioned earlier, should not be saved after deducting expenses from income. Because of this, it may vary randomly every month.

Rule number 7, As soon as your salary or income arrives, set aside the 20% in a separate bank account or sweep it into a mutual fund SIP. This way, you prioritize yourself first, and then the government deducts taxes from your remaining income. Why not pay yourself first and then the government later? Pay yourself first, plan your day in advance, and you’ll experience discipline in both planning and spending.

Rule number 8, the “Leave Items in the Cart for a Week” rule, advises that when shopping online, add the items you want to your cart but leave them there for a week. Don’t convert, don’t pay, and don’t delete them either. After a week, reevaluate whether you still need those items. Brilliantly, reconsidering things you don’t reconsider usually leads to not purchasing unnecessary items.

Rule number 9, the “30% on Rent Rule,” suggests that whether you’re renting or paying home EMI, your monthly installment should not exceed 30% of your monthly income. If it does, reconsider that purchase.

Hack number 10, the “Money Fasting Challenge,” encourages you to fast from spending one day a month. This means not spending any money, whether in cash, digitally, or online. It helps in planning your day in advance and brings discipline to your life.

Rule number 11, the “1% Savings Boost,” recommends increasing your savings by just 1% every month. If you’re saving, for example, 1000, save 1010 the next month, and slowly tilt more towards your savings. It’s a simple yet effective way to gradually increase your savings.

Hack number 12, the “2x Rule of Luxury Goods,” advises that the cost of luxury goods you purchase should be less than or equal to twice the amount you have in your bank account. It emphasizes spending discipline and avoiding credit card debt.

These rules and hacks are aimed at instilling financial discipline, promoting savings, and preventing unnecessary expenses, ultimately leading to a more secure and mindful financial life.

Rule number 13, the “80/20 Investment Rule,” suggests that if you invest ₹1, allocate 80% of it for long-term passive investments, where you don’t need to monitor it every day. The remaining 20% can be actively managed, involving decisions like buying or selling based on daily market conditions. Passive investment refers to a strategy where you invest in assets and hold them for the long term, aiming to minimize trading and maximize returns over time.

Hack number 14, the “Three-Day Grocery Rule,” advises buying groceries every three days instead of weekly. This psychological trick helps in avoiding unnecessary purchases, as you tend to buy more when shopping for an entire week. By purchasing for three days, you limit the items you pick up and make healthier choices.

Rule number 15, the “15-Minute Review,” emphasizes spending just 15 minutes every week reviewing your financials. Divide your salary by four and plan your expenses accordingly. Reflect on what expenses brought happiness, which ones you regretted, and which you wanted but didn’t indulge in. This regular review helps you understand your relationship with money and keeps you disciplined.

Rule number 16, the “30-Day Rule,” suggests waiting for 30 days before making any non-essential purchase. After this period, reassess whether you still need or want that item. Often, the answer will be no, helping you avoid impulsive and unnecessary spending.

Rule number 17, the “1% Expense Cut Rule,” encourages cutting 1% from your previous month’s expenses. If you spent ₹10,000 last month, try to spend ₹9,900 this month. While this rule has limitations and you can’t cut beyond a certain point, it instills discipline and forces you to think about where you can reduce unnecessary spending.

These rules and hacks collectively contribute to building financial discipline, reducing unnecessary expenses, and promoting a healthier financial lifestyle.

Rule number 18, the “Cash-Only Weekend Rule,” suggests that during the weekends (Friday, Saturday, and Sunday), you should use only cash for your transactions. This rule aims to make you more aware of your spending habits and the actual amount of money leaving your hands. In the digital world, where credit cards and online shopping dominate, using physical cash can create a tangible connection with your spending.

Rule number 19, the “52-Week Savings Challenge,” is a challenging but rewarding practice. Starting from week one of the year, you save the corresponding week’s number in rupees. For example, in week one, you save ₹1, and in week two, you save ₹2, and so on. By the end of the year, you will have saved ₹137,800. It’s a gradual increase, and you’ll need to plan accordingly to meet the challenge.

Hack number 20, the “Round-Up Expense Challenge,” involves rounding up your expenses to the nearest 10 or 100 and saving the difference. For instance, if you spend ₹53, round it up to ₹60 and save ₹7. This additional savings can accumulate over time, helping you build a financial cushion.

Hack number 21, the “50 Percent Windfall Rule,” advises saving 50 percent of any unexpected windfall or extra income. Whether it’s a gift, bonus, prize, or freelance income, commit to saving half of it. This disciplined approach ensures that you are not splurging all of the additional money that comes your way.

These hacks encourage mindfulness in spending, discipline in saving, and making the most out of any extra income or windfalls. Remember, financial habits take time to develop, so be patient and stay consistent with your efforts.

Rule number 22, the “% Overtime Rule,” suggests saving 50% of any additional income you receive due to overtime, one-time bonuses, freelance gigs, or any extra work. This rule emphasizes the importance of disciplined savings whenever you earn more than your regular income.

Hack number 23, the “20% Freelancer Rule,” addresses the unpredictable income that freelancers often face. Despite the irregularities, the rule advises saving 20% of any income received. This consistent approach ensures that freelancers build a savings buffer even when their income fluctuates.

Hack number 24, proposes an attempt to modify the “50-30-20 Rule” to a “50-25-25 Rule.” In this attempt, the rule suggests allocating 50% of your income to necessities, 25% to discretionary spending (wants), and 25% to savings. This slight adjustment aims to encourage more savings while still allowing for discretionary spending.

The final message emphasizes the importance of having at least some money beyond which you cannot save—life has no limits, but within your earnings, there is a limit to what you can save. It encourages the idea that there is no limit to what you can earn in life, and if you invest your money wisely and consistently over the long term, you can build substantial wealth.

The mention of “game investing” likely refers to the concept of investing as a strategic game, highlighting the impact of compounding over an extended period. It encourages actively growing your income and diligently investing to see the compounding effect maximize your wealth over time.

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