What are the fastest ways to save money? How one can do little and save millions?
These questions catch attention, but are they practical?
If something can save millions of rupees, by consuming only minutes of your time, how would you feel about it?
I am sure, this will make money saving as the most trending thing among young people.
In reality, people think more about day trading, gambling, race course etc for money making. These activity excites them more.
Because it can churn for them quick money.
What if we know how to mint some quick money through cool saving tricks? In this case the urge to day-trade, gamble etc will be easier to subside, right?
Sure, but what are those cool saving tricks?
This is what we will discuss in this blog post.
Be rest assured that what we will read here are more derived from practical approach than bookish theories. Hence, it may look odd (or too easy) in the beginning, but they are effective in long term.
Effectiveness is key when it comes to save money. Purpose of saving must be known to know its effectiveness.
In broad terms, people save money to build wealth. So both slower or faster ways to save money should ultimately build wealth for us in long term.
Like Rome was not built in a day, wealth building also cannot happen in quick time. One cannot sow seeds today and expect fruits tomorrow.
It is a inherent quality of money that it grows only slowly. Money makes money, and there is an incubation period. Nature has decided that to build real, sustainable wealth, money making should happen only at a certain speed.
Money doubling in a year is all myth. It may have happened once in thousand, but that is luck. It is not a part of authentic money making.
Slowly generated wealth is most likely to stay for long time with the beholder.
But do not get disheartened, to save lots of money, there are some quick methods. It is possible to do little now, and earn bargain worth lakhs in times to come.
We will see here few cool saving options that are quick to implement. Once they are implemented, they have huge potential to save money.
One has to just take those extra steps initially. These saving options just need that initial push, after that they keep building on their own.
It will not be wrong to tag these savings options are automatic. You just need to start, rest is almost done automatically.
There extremely affluent people practicing these fastest ways to save money. We can also use the same tricks to build wealth for self.
Let me give you a small analogy.
If I will tell you to dig a 80 feet ‘Well’ & earn $2,000, you will probably ignore my offer. But if I tell you to dig 1 feet every day and earn $25, you will probably give it a thought.
When there is too much visible hard-work, people tend to avoid it, as result work done is zero. But it the effort gets distributed evenly, the work actually starts and eventually gets done.
‘Slow work done’ is better than ‘no work done’, right?
Something very similar happens when we fix our savings goal. Years of avoidance in the past has already created a big toll on us. As a result, financial calculators tells us to invest 5 lakhs today or else goal is unreachable.
The financial calculators are not wrong. But they do not understand human psychological limitations.
It is essential to START (first). Then it is important to get into the HABIT (second). Only after the habit is developed, one can start doing EXTRAORDINARY THINGS (third).
In terms of Engineering, if the starting torque is too high, probably the machine will never start. There needs to be a balance.
If people know that they have to do little now, and can save lakhs later, they will at least START.
Lets see few faster ways to save money…
Apply these saving option today & you can be rest assure that you will get richer every passing year.
#1. Sell junks of your home
You can give 30 minutes each month to this activity to generate savings.
Bravo getmoneyrich! What a great idea to save money …idea sucks?
I know most of readers has already decided to leave me here itself. But please wait, give me few more of your eyeballs.
We all have used Olx, Quikr, Cex etc to sell our second hand household items, gadgets etc.
But how often we do it? And, what we do with this money? These two questions are important.
If we sell $35 worth of goods once a year, it does not help. But if we make it a habit, and do it once every month and, earning $35/month will start making sense.
So idea is to start selling junks of our home on regular basis.
On weekends, with your family, identify items that can be sold online. Book those items on Olx/Quikr etc and sell it.
You will notice that you are beginning to start generating money from things you have already been forgotten.
It is like building money from nothing. This is what we can call real SAVINGS.
Junks of our house consume space and sometimes also energy. Unloading your house of this burden will really save you lot of space, bring good-feeling, and would also add money in your wallet.
There is a second step….
This is as important as selling junks.
What to do with the accumulated money? Do not worry, I will not suggest to save it.
Instead I will suggest you to immediately spend it. Where to spend it?
One suggestion will be to spend it for a noble cause. Make donations to a reputed organisation. Make sure that that the donations are eligible for income tax deductions.
I know people claiming huge income tax deduction u/s 35/80GGA on account of donations.
Isn’t this an innovative idea to save money? These days one can make donations online and claim tax benefits easily.
Regular donations made like this has potential to save lakhs of money later.
If the idea of donation doesn’t look inviting, use it to buy some investments (like ELSS, ETF, Index Funds, etc).
#2. Increase your contribution to retirement funds:
You can give 20 minutes each year to this activity to increase your savings.
This step is even easier. Contribute 5% more than your default self-contribution going towards your retirement funds.
If you are building your own retirement corpus by investing, start investing more than what you were doing last year.
In case you are doing it through the Employees Provident Fund (EPF) scheme, approach your companies accounts manager and ask him to increase your self contribution by 5%.
Be specific in giving your instruction. Request the authority to deduct 5% more than the default self contribution.
If your default self contribution is say Rs.5,000 last year, make it Rs.5,250.
In case you get a pay hike next year, and your default contribution become Rs.5,500, increase your self contribution to Rs.5,775.
Keep increasing the self contribution by 5% every year till you retire. Make it a habit.
This step will not take more than 20 minutes of your time each year. But it has huge saving potential.
Over a period of 20-25 years, one can save lakhs of money more.
Imagine what potential this option has if you increase your retirement savings each year by 5% extra than default. This not only increases your retirement savings, but actually makes you a compulsive saver, how?
See, retirement savings never reaches your hand, so you are actually compulsively saving money.
In todays times, when spendings happen on temptations, compulsive saving is a wise decision.
The effect of increasing retirement savings each year will not be visible immediately. Track the growing retirement corpus online.
The feeling to see that money grow month after month is invaluable.
But more than feeling, when you will get old, you will thank yourself million times that you did this to make your retirement savings grow bigger.
#3. Increase your home loan EMI:
You can give 60 minutes each year to this activity to increase your savings.
There is huge saving potential if one prepays the home loan.
Real life example: Once I made a prepayment of my home loan ($800). The amount of money (interest component) that I saved was nearly 2.5 times of the prepayment amount.
Isn’t it awesome?
This is one example where prepayments of home loan is done using a lump sum amount.
Another easier example of prepayment is to keep increasing monthly EMI by 5% every year.
Keep the same EMI for 12 month. From 13th month increase the EMI by 5%.
In order to increase EMI you will have to travel to your bank and file a written request. That’s it. This you will have to do only once in a year. The time consumed will be close to 60 minutes.
This is one of the fastest ways to save money. The saving is assured and happens instantly (the moment you make the part-payment).
But the saving potential of this small effort is huge.
I have seen people saving money every passing month just to make prepayments. They have inculcated making prepayment as a habit.
One can use online prepayment calculators to check how much they can save through prepayments.
Read more about EMI reduction by prepayments.
4. Keep adding a new recurring deposit every year (Maturity: Retirement):
You can give 20 minutes each year to this activity to increase your savings.
Suppose your age is 35 years of age as on today. It means, you have 25 more years before you retire from your job.
At the end of each financial year, make a habit of starting a new recurring deposit in your bank worth 1% of your present monthly expense.
Suppose your monthly expense is Rs 50,000 per month. Start an online recurring deposit of Rs.500 per month (1% of 50,000). The tenure of this recurring deposit will be 25 years (or maximum tenure allowable).
Next year start a new recurring deposit.
Suppose in year 2 your monthly expense will be Rs 54,000 per month. Start an online recurring deposit of Rs.540 per month. The tenure of this recurring deposit will be 24 years.
Similarly in year 3 your monthly expense will be Rs.58,320 per month. Start an online recurring deposit of Rs.583 per month. The tenure of this recurring deposit will be 23 years.
Similarly in year 4 your monthly expense will be Rs.62,986 per month. Start an online recurring deposit of Rs.630 per month. The tenure of this recurring deposit will be 22 years.
This way, keep starting a new RD every year.
As the savings is small, one will not feel the pinch of it every month.
But on other hand, due to compounding one can save lakhs of money in time horizon of 25 years.
You can see from our example that, just by saving 1% extra each month, one can build a corpus of Rs.69.69 Lakhs in a span of 25 years.
5. Buy gold ETF every year
It is a good idea to consider gold as a saving option. Please note that we are not referring gold as ‘investment’.
Gold is a speculative asset hence we will prefer it more as a saving option than as an investment option.
It is Gold which can lock our money and prevent casual spending.
Gold is a scarce commodity and with passage of time it will become more and more scarce. This will ensure its capital appreciation in times to come.
But there are some inherent problems linked with physical gold. First is the storage issue, and second is high cost of acquiring.
Even 10 gram of gold costs more than Rs 29,000. On contrary, gold ETF’s are available in much lower denominations.
ETF is available in de-materialized form hence storage issue is also taken care.
If one buys regularly (each month) gold ETF’s for say next 20-25 years, its going to become a substantial savings over time.
Buying gold ETF is easy, one can use online trading accounts to buy some.
Suppose one buys Gold ETF worth 15% of his/her monthly expense. Considering, average return of gold in next 25 years as 13.66% per annum, lets see how much one can accumulate in next 25 years:
Final words on fastest ways to save money…
Saving money is slightly more tricky than we think. But there are ways to get over the saving hurdles.
One of the best ways to make saving money easy and effective is discussed in this article.
Many save money but the saved money gets spent on needless things. This is not effective.
To make savings effective one much channelize the funds in right direction.
Saving income tax, saving interest expense, increasing retirement corpus, and accumulating gold ETF are one of the most effective and also the fastest ways of save money.