Do you feel like it’s absolutely impossible for you to save money? Or you feel that the amount of money you save every month is peanuts. This is probably because you keep a very high margin of safety.
This is what most people do:
Receive salary (let’s say INR 1 lakh)Spend on rent, food, travel (let’s say INR 60k)
Invest a portion of the remaining (let’s say INR20k)You saw what just happened?
We save only INR 20k out of the possible INR 40k because we want to keep a buffer in case we have miscellaneous expenses.
We are treating our monthly salary as an emergency fund instead of actually building one (3-6 months of monthly expenses in a liquid or arbitrage fund). The problem is that the “ease of access to money” (savings account) results in higher expenses automatically.
Economics 101 !!! Ya, we humans suck that way coz we can’t control our urges and justify everything.Solution:Estimate your monthly expenses realistically.
also read : why people are starting businesses from Singapore
Keep a margin of safety of 10% (to be kept in a liquid fund along with the emergency fund and withdraw when required) Invest the rest at the beginning of every month.
If you think you’re living paycheck to paycheck do this- Invest a certain amount at the beginning of every month and tell yourself that you can withdraw it in case a need arises.
You will be surprised at how you will adjust your spending habits to sustain the investing.
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