3 tips on developing the discipline to save

What is the secret to achieve your financial goals or build sufficient corpus? It is not finding the lowest cost trading platform, investing in complex products or taking uncomfortable risks. The secret is to have the discipline to start saving and persist with it. Saving is the most fundamental part of financial planning. If you are diligent about saving regularly and investing prudently, you can achieve your short-term and long-term financial goals – be it your child’s education or buying a home.

Here are some practical tips on bringing discipline to your savings journey:

Save first and spend later

Warren Buffet once famously said that, do not save what is left after spending; instead spend what is left after saving. Many experts recommend saving at least 20% of your income each month. Of course, the figure depends on your life stage, salary and responsibilities. A healthy adjustment to this rule is to increase your savings rate as you grow in your career and your income increases.

The Covid – 19 pandemic induced lockdown gave us some pointers on the difference between essentials and non-essentials. Make a list of mandatory expenses like rent and utility bills. Next, figure out how much you would need to spend on food, entertainment and commute. You should then attempt to manage your expenditure within this amount every month. The rest needs to be saved with discipline. Savings, like many other aspects of your life is a habit, you need to inculcate over time.

Detach yourself from things you don’t need

There are so many amazing things to buy and experience. Even if you can afford to spend, or buy on EMI, think twice before making that purchase. Ask yourself how useful the item is and if it is, set up a goal to save for it first and then buy. This way, you do not risk falling into a debt trap. Before impulsively spending on everything that you come across, take a step back and evaluate your priorities. Find out what brings you real joy and satisfaction. Do not tighten the belt so much that life becomes a drag. But it would be ideal shift, if you splurge on things that matter and experiences that bring fulfilling happiness.

Automate, automate, automate

As we all lead a busy life, we tend to neglect some mundane but essential things. Sometimes, initiating savings get postponed. However, you could use technology to your advantage. You can easily set up automatic transfers or OTMs (one time mandates) from your bank account to pay monthly instalments on SIPs (Systematic Investment Plans). Once the transaction is set up, you can be satisfied that you are not only saving regularly but also investing for your money to grow.

Money, like water, can easily slip through your fingers, so it is essential to be conscious of your money habits and build financial discipline. The idea of disciplined savings may sound tedious, but it goes a long way in making us use our hard-earned money constructively and achieving financial freedom.