Have you ever re-evaluated your expenses after getting a salary hike – and then been hit by the realization that you still aren’t able to save much? You aren’t alone. Listed below are the few reasons that may explain why you can’t save much even after an increase in your income.
When you start earning, it’s natural to dream big, buy that expensive car or phone you had your eye on for a long time. But you must not materialize your desire of having an extravagant life if you want to have savings. Some spends are more than they are worth – i.e. they don’t add too much value to your life. These usually end up being a huge liability in the future. You must define and differentiate your needs and your wants to set a tone for your financial future.
With an increase in your income, you must use access to your new financial tools responsibly. For example, with a higher income, you will get easy access to credit cards. But not managing the extent of your credit card usage can impact your finance. Wonder how? Using your credit limit for more than 40% can negatively impact your credit score. Also, you need to pay a high-interest rate, and if you miss a payment, you have to pay a penalty amount.
It is perfectly fine to want to have all your needs covered, but it also important to be financially secure. Next time you set your eyes on that expensive phone or anything else, analyze its pros and cons and judge whether it is something that you just want or something that you really need. Differentiate between your needs and wants.
Investments are not worth your time?
Many millennials think learning about investments is not worth their time. The process of learning about investing and wealth generation sounds boring to them. Do you think the same way? Well, cultivating a saving habit can help your financial future. Disciplined saving habits like SIPs are a great way to cultivate good financial habits.
As you earn, it is also important to learn how to save money and generate wealth.
Not keeping a track of your money?
When we talk about cultivating good financial habits, tracking the flow of your money is one of them. It is important to keep track of where your money comes in and flows out. A simple test is this – can you say exactly how much is in your wallet/purse right now? If not, you need to get a better grip on your finances. As said, a rupee saved is a rupee earned. Keeping a track of money by checking your bank statement weekly, keeping a note of your daily and monthly expenses, etc. can help you highlight the expenses that you can cut off.
Managing your finances and cultivating good financial habits can help you in the long run. Savings have proved to be lifesavers for many people. Cultivating such habits and focusing on generating wealth can help you save money and have a secured future. If you are looking for a financial adviser to manage your finances, let Fincity be your adviser.