The age old truism, ‘Money saved is money earned’ has been the ultimate maxim for people across all ages, cultures and fields. For those who disregard this golden rule, financial troubles are just around the corner. And if not addressed head on, can turn into a scary financial avalanche. With all the hard work, stress and pressure that the corporate world entails, we feel that we have earned the right to pamper ourselves silly. Hell, we deserve to go overboard once the paycheck comes in! However, even though setting aside a sludge fund is imperative, it is important to make some crucial mindset changes to keep the financial burden from weighing us down.
Tips on how to save money
Here are some time tested tips on how to avoid a monetary nightmare:
- Think stocks– The stock market is a scary place only if you enter it with the intention of making quick profits in very little time. The field is an absolute gold mine, but if not played carefully can turn into a terrifying minefield in no time. Your choice of stocks should be based on careful research and expert advice. And it should be long term. Investing in dependable shares of solid reputation is a great way to make gains. And keep your eyes open for share market tips and share market related news.
- Credit card dilemma– Going by the adage ‘A stitch in time saves nine’, you need to address your credit card problem immediately! Delay in paying can result in severe money wastage on interest payments. Studies show that the card with the highest interest rate should be tackled first. The painful process of interest payments start seeming easier once the heftiest payment is made.
- Investment– Investment is the golden word for securing your future. It is the key to multiplying your wealth if done wisely! Rolling your money and using your earnings to earn more is bound to be rewarding. However, making decisions based on infomercials and idle talk might not be a good idea. So engage the services of an experienced financial adviser and take the right steps.
- Retire wealthy– Don’t miss out on the hefty sums that your employer doles out to match your contributions. Neither should you deprive yourself of the tax breaks derived from the pre-tax deductions of the money you save in it. And of course long term investing in stocks also ensure a cushy bank account by the time you retire.
- Set a stop-loss on your splurges– Ultimately, with all the saving strategies we might adopt, it is all a failure unless we get a handle on our spending. Drawing out a workable plan is imperative. A record needs to be kept of your monthly expenses and the expenses that are totally avoidable. Budgeting is crucial when it comes to achieving financial stability.
- Stash your money smartly– Your hard-earned money needs to be saved somewhere. This would depend on three things- your funds must be liquid, they must be free of investment risk and they must earn a high return. So think about putting your money in a high-yield savings account. That way you can make money by simply letting your funds sit pretty in your account.
- Don’t bite off more than you can chew– When thinking of multiplying your money, be balanced and moderate. Don’t jeopardize your property, security or your child’s future to invest in stocks. Only use surplus and expendable funds to invest in the share market and other lucrative avenues. So if your decisions turn out to be a mistake, you still have something to hold on to.
Creating wealth is an art and when done deftly, can yield huge dividends. But the first step to getting rich is to saving well. It is the crux on which your ultimate financial future depends on.
In August, Mohnish Pabrai took part in Brown University's Value Investing Speaker Series, answering a series of questions from students. Q3 2021 hedge fund letters, conferences and more One of the topics he covered was the issue of finding cheap equities, a process the value investor has plenty of experience with. Cheap Stocks In the Read More