No.1 reason why you can't save money, How I started saving?

Hello dosto...(Hello Friends)

Hopefully, you are having a good day!
But just in case you are having some tension then after reading this article that tension will also fade away.

How??

The most common reason for the tension is finance in other words money, and the first step to get free from financial tension is saving, which is the topic of this article.

Let's try to understand the concept with a small story...

Once there were two friends who used to play together, study together, went to the same school, the same college and even joined the same company where the salary package of both was also the same.

Now comes the twist in story...

Soon after the first friend gets his salary all is money gets spent in the expenses like bills, Rashan, EMI, dining out, movies, etc. and at the end of the month, the first friend is left with an empty wallet. On the other hand, the second friend also has the same salary and have a similar expense but somehow he was always able to save some money at the end of the month.

The second most difficult that first friend faces is that wherever he has some unexpected expense or have any emergency he doesn't have sufficient money so he always has to go to his second friend and ask for money with a promise to return on a specific date.

Although he always returned the money on the promised date. but when the first friend had to repeatedly ask for money. His self-esteem started to fall and he was always feeling anxious and powerless, but the second friend was always happy, confident, and tension free. And both friends have observed this but,

Money is such a topic in our society that you cannot share your problems with everyone.

But since these two friends were chaddi buddy, one day when they were having drinks the first friend asked second friend buddy we are having the same salary but I always have to you come to you asking for money but you never need to ask for money, so how do you manage this.

Then the second friend replied "it's not very difficult first you have to understand the most common reason for not being able to save money"

No. 1 reason for not being able to save money

Then the second friend continued, let me remind you formula that we have studied in childhood:-

Income - Expense = Savings

Means after receiving our income when we have done all our expenses then whatever is left is our savings. And this concept has established its root deep within our subconscious brain.

And this is the real reason for not being able to save money in most of the people all over the world.

Then what should we do to save money? 

What the second friend doing differently?

He follows a different formula.

The simplest formula for saving money

This formula has just a minor modification in the previous one but with a major impact. So the formula is:-

Income - Savings = Expense

It simply means that whenever you get your income first of all you transfer a portion of your income to your savings/investments then manage your expense from the balance.

Now you might be thinking that

"What are you saying bro! We have our monthly expenses that we must do like house rent, utility bills, credit card bills, etc. that we must do at any cost"

Then my friend if you analyze this a little bit more closely then you will find that these fixed expenses are limited because the living standard of a person is based on his income. In short, a person earning 10Lac can save and a person earning 10k can also save money.

And if someone is having trouble meeting his normal daily life then it simply means that he/she has increased their living standard beyond their capacity. And to get out such situations soon I will also write an article to share my experience and learning with a budget.

Let's try to understand more deeply from the point of view of a person who has never done savings.

How to start saving money?

Let's assume your income is 50,000, Now make a list of all your fixed expenses & calculate the total money required. Then subtract that money from your income & divide the balance amount 20,000 into two parts first is saving & another is lifestyle expenses like movies, party, etc. in this case lets assume it to be 10,000 in both the categories.

Now what you have to do is simply put these 10,000 in your savings which are not easily accessible to you so that you can use this amount only in case of emergency.

This formula is very simple but that does not mean that it would be easy to implement also. Infact when I started to use this formula for the starting 5-6 months I was having a very hard time managing everything but slowly as my savings started to grow my motivation also skyrocketed & saving become my habit.

Now one more very important thing for you to consider is:-

My savings are sufficient or not?

To get the answer of this question, we will calculate our saving percentage with the following formula:-

SAVINGS x 100 

INCOME

If the value of the saving percentage in your case is less than 10% then it is bad, & you seriously need to reduce your expenses you might even have to cut your fixed expense.

if the value is between 10~20% then it's OK

if the value is between 20~30% then it's Good

if the value is greater than 30% then it's best.

Our aim should be to shift our savings in the next category either by increasing our income or by controlling our expense, although it is always preferred to increase saving by increasing income.