If you carefully observe the financial behaviour of people around you, you will notice that people generally fall into the two broad categories: The Frugal and the Spendthrift.
Of course, you’ll find the balanced ones. The people who save and spend, are abundant and generous at the same time. We look at such people with awe and wonder how they strike that balance.
So how do these people spend and save and still not appear cheap?
The mantra is in creating the perfect balance. It is how we balance saving with expenses that makes us abundant in the real sense.
Saving and Spending or Saving vs Spending?
Let’s get into the mind of the spendthrift. The first things that cross their minds when they receive their salary are –
– What to spend on
– What next to buy
– What are my needs now
With no regards whatsoever to saving a dime for the future, the spendthrifts are a happy-go-lucky lot. But that is till the salary lasts, which is about 10 days from the day they receive it.
The rest of the month, these folks live like paupers on petty cash received from family members and friends. The word ‘saving’ is either a futuristic plan or a loathsome idea for them.
The next group – the frugals, are a world opposite. These people are always on the lookout for deals, the cheapest deals that will save them a buck.
They haggle for everything and put their lives on hold for a future affluent time. Naturally that time never comes, since affluence is more a state of mind than a physical reality.
The frugals are the poor in mind, even if they have a 6 figure salary. The mind of a frugal revolves around –
– Savings from present expenses
– Savings for future life
How to Save Money without Being Cheap
No category is superior or inferior to the other. The spendthrifts often look down upon the frugals, but when their money is depleted, they come to the frugals for month-end debt.
I would like to put a disclaimer here that my generalizations are just that – generalizations. Nothing is aimed at any group of people.
Please take my generalizations with a pinch of salt, and let me know if you agree or disagree with them, without being a cynic or a critic.
I have personally been through the extremes of both spendthrift-ness and frugality. I especially remember my pre-Durga Puja months wherein I would save like a miser so that I can spend with open hands during the Puja and Diwali, which I did.
Post-Diwali, I would be left with practically nothing to support myself till the next salary arrived.
But I’ve grown ever since my early-20s and have learned through experience how to wade through the muddy waters of consumerism and distinguish between wants and needs.
I have also been wiser in my investment and money-growing schemes.
Based on my experiences, and trial and error, I have written down 10 foolproof Ways to save money without being cheap. Read on, and see how many of these you can start applying immediately.
1. Set a budget, stick to it
Said the businessman David Ramsey – “A budget is telling your money where to go instead of wondering where it went”
This quote practically changed my perception of budgeting. Budgeting, I used to think, was for parliaments and governments. How wrong!
Anyone who earns even a couple thousand bucks should start with a budget. Budgeting helps not only to allocate money to various important areas, it also streamlines your expenses.
Almost everyone is powered with a smartphone now. There are scores of Expense managing and budgeting apps that come with very easy to use features, and timely reminders.
These apps are so advanced, they’ll even remind you of your utility bill payment schedule, your premium paying dates and so on.
If it helps, you can set your budget for an entire 6 months or a year in advance. Always be a little lax around the celebratory months so that you can enjoy the festivities to the fullest.
Budgeting helps you set your financial goals. Without goal setting, achieving equilibrium in your finances can be tough.
If you need help choosing an expense budget manager, you can check our review of the best budgeting and expense trackers here – 8 BEST APPS TO TRACK MONTHLY EXPENSES IN INDIA
2. Have an RD Account
We Indians love saving. As per data from The World Bank, almost 80% of Indians have bank accounts. The chosen mode of savings for us is bank interest.
However, given the present rates of savings account interest (mine gives 2.7%), our attention naturally shifts to Recurring Deposits (RD) and Fixed Deposits (FD).
Both RD and FD have higher rates of interest for short term investments. In fact, most RDs and FDs are more profitable for short-term investments now.
You can earn as much as 6% – 8% on an RD or FD.
Banks now enable direct deduction for RDs from your savings account, making it even easier to save. You do not need to go to the bank every month to deposit the money for an RD account.
You can also start an RD from as low as Rs. 500 per month, for a period of a year or 15 months. So what’s stopping you to get yourself an RD now?
3. Invest in ETFs
If your risk appetite is good, you can go beyond saving, and start investing. For beginners, you can invest in ETFs (Exchange Traded Funds). If your risk appetite is a little higher, Stocks can be a part of your financial investment strategy.
ETFs are wonderful instruments for slightly long term investment. Warren Buffet, one of the most successful investors in the world, considers ETFs a very reliable investment tool for retirement.
Future-proofing is something that is ingrained in our minds since the time we start earning. We often hear our elders say to “save for the future”. Even though Gen Z and millennials do not pay to heed to such advice, there is indeed much wisdom in paying attention to it.
If your profession does not provide a pension system, you should, even more, start investing in ETFs or ETF Bonds. It is a myth that investment is for middle-aged folks. The sooner you start investing, the lesser you’ll have to worry about your advanced years.
What is more, when you start investing at a younger age, you are more aware of finances and can create a balanced financial portfolio that can help you get better deals on credit cards and loans, should you need one.
If you want to know the benefits of ETFs, and how in what terms they fare better than stocks and debentures, read our post on ETFs here .
4. Purchase through Credit Cards
We all make purchases throughout the month, be it grocery or stuff needed at home, or stationery items or perhaps apparel. We all pay our bills and mortgages.
Now imagine every time you pay, you get back something from the amount you paid. It can be in the form of reward points that you can later redeem for some gifts, or it can be in the form of cashback.
Earning from paying your bills and buying grocery and other necessities is like getting a return birthday gift. Based on your per annum pay, and your purchase trend, you can apply for a credit card best suited to your needs.
We also have a cards section wherein we have discussed the best credit cards available in the market. Read our credit card reviews to see which card best suits your expense trend.
5. Buy in Bulk whenever possible
We all have things we need on a regular basis. Buying in bulk for such commodities can easily save us a good deal of money.
Stuff that I always buy in bulk is grocery items. I look for deals that offer a buy 1 get 1 offer, or have a heavily reduced price when bought in bulk.
Even daily necessities like grains and pulses when bought in bulk offer reduced prices. Just make sure that you have good storage available for storing for the long term.
There are also new brands that have amazing introductory offers for trying out their products. Make sure to use your credit card to bulk purchase so you can win on the reward points too.
6. Purchase during Sale Offers
There are some set gifting occasions and celebrations throughout the year that we always look forward to. Festivities mean exchanging gifts. For some of us, it is more about giving than receiving during celebrations.
Every brand offers sale at least twice a year. A sale is the best time to bulk purchase for all the occasions where you need to gift your cousins and friends and nephews and nieces.
If you have no such liabilities, you can still look forward to buying for yourself during a sale. You can save a few hundred to thousands of rupees from your favourite brand, without compromising on quality.
The big eCommerce sites like Flipkart, Myntra and Amazon to offer sale multiple times a year, and there are some really good deals available during such sales.
For bulk purchases, you can save at least a few thousand rupees compared to if you bought the same thing without sale from these online stores.
As someone who had been addicted to consumerism, the best saving advice I can give you is to prioritize your needs.
More often, we look at what we want instead of what we need. We base our happiness on our wants, and that marks the beginning of the inevitable drainage of our hard-earned money.
The millennials are heavily into consumerism. I have seen people spend half their salary on new clothes and hairstyles and perfumes for 15 seconds of a video on some social medium! It is true that the apparel would stay there after your social media stint is over, but did you really need it in the first place?
Get a reality check. Take out your budgeting app, and write down all the things you want to purchase, and put a price beside them.
Now categorize them into your needs and wants. The needs category would have stuff that you absolutely need to get you through this month. The wants list would have the stuff that you plan to buy someday but can easily get through life without having those right now.
Next, total out the money of all the items in your want list. Now cross out all the items in that list. There you go! You just saved yourself at least a few thousand bucks. You can now spend that money on necessities or save for later use.
8. Get a side gig that pays
It is a known fact that the rich do not get rich by saving, but rather by increasing their earning.
You now have the internet in the clutch of your hands. You have a device that can teach you wonderful skills. There are hundreds of free websites that teach you coding, sewing, designing, digital marketing and so on. You can create a YouTube channel and put your content for the world to see.
The ways to pursue your passion and earn from it have never been wider before.
You can work at a 9 hour 6 days a week job, and still learn on your way to commute, on weekends.
Just replace your social media consumption time to learning something new. In a year, you will be armed with a new skill that can begin for you a new income source.
Get into learning and earning from it. You’ll find your finances balanced.
9. Healthy Lifestyle
You might be amazed at how a healthy lifestyle can help you save money without appearing cheap. Consider the following scenarios and judge for yourself.
You have a gym membership to keep yourself fit, but you hardly hit the gym.
Your sedentary lifestyle and eating habits are turning your health, and you often consume pills for headache or stress-relievers. But you hardly have time to visit the gym though you are paying for the membership every month.
You are nearing 40, and you already experience frozen shoulder, spondylitis, a ligament tear. Your annual eye checkup costs you a bomb. You go into physiotherapy sessions for your spondylitis, and the cost again cuts its sharp teeth into your monthly budget.
If you notice, all the above scenarios involve paying for doctors, medicines, checkups and perhaps higher life insurance premiums.
You can cut down on all the above expenses simply by doing some free-hand exercises every day or every alternate day. A little goes a long if you are consistent about it.
You can try yoga or stretching or running or swimming. You can practice meditation. All these small steps can save hundreds and thousands of rupees that would go into healthcare.
10. Don’t be consumed by thoughts of Saving
Frugality can be an addiction too. Often, when we start saving, we do so at the expense of our basic requirements.
Squeezing out every penny from a deal, long hours of bargaining, waiting for the price at the sale to go down even further – these are all alarming signs that your mind is getting consumed by thoughts of frugality.
Get yourself a calculator and check if you have started saving at least 25-30% of your income. Even starting with as small as 10% would do.
If you are, then there’s nothing to worry about. Think thoughts of abundance and how you can learn a new skill so that your income and savings both soar.
Lastly, if we stop worrying about how our spending habits appear to others, it will simplify our lives. Like the famous saying goes “ Wearing cheap clothes and driving an old car doesn’t make you broke, remember you have a family to feed, not a community to impress.
Want to add to the list of ways to save money without being cheap? Let us know your proven ways of striking the expenditure-saving balance.