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How to save money from your salary

Saving from scratch? No worries. We all have to start somewhere when it comes to putting our money away.

Whether you're changing your savings habits or creating new ones, finding new ways to manage your money can bring you closer to your financial goals.

The following money management tips will steer you in the right direction.

Put your money in a savings account

Open a savings account, use it wisely and watch your money grow. You'll earn interest on your money over time, and even earn interest on that interest! This is known as compound interest. 

First, do your research to find a savings account that will suit your needs. A regular savings account will earn interest on your money, and you can make easy withdrawals and deposits. This type of account typically comes with a minimum balance requirement.

If you're happy to lock your money away for a while, a fixed deposit account will earn you an even higher rate of interest for keeping your money in the bank for at least 7 days and up to a maximum of 10 years.  

A salary savings account may be opened by your employer for automatic salary deposits. With our Employee Banking Solutions HSBC Salary Account, you'll get unlimited transactions at HSBC ATMs, exclusive digital offers and access to financial planning services. 

The type of savings account you should choose will depend on your goals, how often you plan to contribute, and when you'll need to access the money.

Set your savings goals

Having a specific savings goal in mind can help you stay focused. Maybe your goal is more short term, like a wedding, home renovations or travelling. Once you've set your goals, decide how much money you want to save and how soon you need to save it. 

You may want to use a savings goal calculator or try writing down your goals and placing them somewhere visible like the fridge, or create a note in your phone. Having these little reminders can keep your goal at the front of your mind and make it easier to stick to your plan.

If you're not sure how much you're able to save a month, you can review your spending and try following the '50-30-20 rule'. 

What is the 50-30-20 rule?

To meet your goals, you should aim to save:

  • 50% of your income on needs, such as essential living expenses, rent, bills and food
  • 30% on wants, such as eating out and shopping trips
  • 20% on savings or debt, such as paying more than your minimum repayment or putting money into an investment account

Pay yourself first, then spend

Prioritising your saving is important for managing your money wisely. If you can, pay money into your savings account as soon as you get paid (leaving enough money to cover your needs). You could even set up a standing instruction if you're saving the same amount each month. That way, you'll be paying yourself first, automatically.

Borrowing on a credit card can make this budgeting method difficult. You might not realise you're running over your budget until you see your bill. Regularly review your credit card and bank statements to find areas where you can cut back to meet your costs. 

Save and spend together

To get into the habit of saving regularly, you could check your balance at the end of each day and put any extra rupees into your savings pot. For example, if your balance is INR5,005, you could add ₹5 to your savings. It's an easy way to keep your savings growing while having little impact on your day-to-day spending.

If you want to try something different, you could build up from ₹1. You start by paying in ₹1 to your savings, then ₹2 the next day, ₹3 the next day and so on. If you're able to do this for a year you'll end up with ₹66,795, as well as what you earn in interest.

Just keep on saving

Don't feel you have to stop saving money from your salary just because you've reached your goal! Set another goal, and another.

Many financial planners will tell you that you should ideally have around three months of your living costs saved for any unexpected expenses. You may end up having different savings for different purposes, such as an emergency fund or money for a new car. 

Revisit your goals if you're struggling to maintain momentum. Saving even a small amount is better than nothing. Work on developing the habit and then try to gradually build the amount you save over time.

How to start saving money

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