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3 minsNovember 08, 2016

Being ‘in the black’ with your salary is a good thing. Simply put, it means you are earning more and spending less. However, being ‘in the black’ is a question that plagues most youngsters, what with rent, groceries, eating out, partying, gym memberships, shopping, etc. tending to empty our wallets. And more often than not, one is left with a frugal account balance towards the end of the month. But don’t worry: in a few simple steps, we’ll help you get organized about your finances in such a manner that it allows you the freedom spend such that you are ‘in the black’ with your salary at the end of the month.

Make a plan:

As Mark Twain once said, ‘The secret of getting ahead, is getting started.’ The first step in planning your finances is to create a budget plan. List down all your expenses in the previous few months to get an understanding of where your money goes. Having no accounting system not only creates a gap in your expenses, but also makes saving all the more difficult. Once you have laid down the budget plan, you will be able to see areas where you are spending higher, which can be curtailed. Set a spend ceiling for yourself in such areas, and try sticking to it.

I started budgeting very early. I used to get a set pocket money, so I used to ration my spending. This habit continued when I started working. Eventually, I shared it with my son. What happened was that I managed along with my husband, to give ourselves the perfect life. All this required a lot of study, but it was all worth it. Having a dedicated savings account, FD and RD always helps in meeting your financial goals.

Anurag Anand, 43, Engineer

Start saving systematically:

It’s not only important to spend wisely, but there is also a need to save smartly. Start by putting a certain amount aside every month and create a foundation for your saving journey. When it comes to investments, it is important to be disciplined and consistent. There are a variety of financial instruments to help you with the same.

  • Recurring Deposits:
    • A Recurring Deposit is a kind of term deposit account that allows you to deposit a fixed sum every month for a stipulated amount of time and earn interest on the amount deposited. For example, you can choose to save Rs. 5,000 every month for a period of 1 year. At the end of a year, you will get back your principal amount of Rs. 60,000 INR along with the interest earned on the same.
  • SIPs:
    • If you want to invest in equities but are not very confident or well versed with the market, SIPs are a great option. SIPs or Systematic Investment Plans allow you to invest in mutual funds by making small, periodic investments (monthly or quarterly). SIPs offer several advantages, such as consistent and regular savings, lower investment risks, diversified portfolio, and compounded interest. Systematic investments allow you to the bridge the gap in your savings and allocate your funds effectively.
      You can start SIP investments by investing as little as Rs. 500 every month. However, you can increase this amount as per your cash flows and stay invested for a longer period.
  • Mutual Funds:
    • You can invest in mutual funds through SIPs or as a lump-sum investment and they are a good investment option to boost your savings. Mutual Fund companies pool in money from different investors and invest in a variety of securities and stocks. You can visit your bank or a broker and begin investing in mutual funds. You can also invest in Mutual Funds online. Mutual Funds also offer the added advantage of tax saving under Section 80C.

Track your spends with online calculators

Keeping a check on your spends can be a little challenging at the start; however there are several online calculators which can help you keep track. These calculators/apps track how much you have spent in various categories, and also notify you if you exceed the spend ceiling you have set.

So go ahead and start making the most of your money with these simple tips

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