How to save money

Day 280 / 366

I wish they taught us basic money management skills at school. I used to do freelance work when I was at college, and that allowed me to stop taking money from my parents at a relatively young age. By my third year, I was even paying my college fees using the money I made doing software projects. And soon through GSOC, a coding competition, I got prize money that was too large for a stupid 20-year-old college guy to have.

Needless to say, I spent it all on stupid shit within a year. By the time I graduated, I didn’t even have enough money to pay for the deposit of my flat. And even when I started getting a regular paycheck, I would not be able to save a single penny no matter how hard I tried.

I won’t say that I am great at managing my money now, but I have definitely gotten less stupid over the years. There are a few things that helped me, and I try to tell anyone I know who is just starting to earn money.

Firstly, before you think about investing, first work on developing a saving habit. Don’t worry about mutual funds, FDs, or stocks just yet. Firstly just learn how to keep some money aside each month, no matter how much it is. I good rule of thumb would be to start with 10% of your salary. Only once you are able to do this for a few months, you can start thinking about investing it.

Secondly, you must keep savings as a priority. As soon as you get your salary, the first thing you should do is keep that 10% aside. Whether you keep it as cash in a box or transfer it to another account, or give it to your mom. But do it first. Don’t wait until the last day of the month to save money, because you will have nothing left by then.

And lastly, you should make sure you don't touch your savings until and unless it is a serious emergency. And getting that new jeans or buying a Netflix subscription is not one.