The money you earn on a regular basis e.g. Salary, Rents, Interest from Bank is called your Income.The money you spend for your rent, food, bills etc is called your Expenses.
Income minus expenses is your free money i.e. the money left over after you spend on your regular expenses.
If you have the habit of calculating this every month, you will have a very clear picture if you are saving any money at all or spending everything what you have earned.
What is Debt:
After you calculations, if you realise that you spend is more than what you earn, it simply means that you are in Debt. To over come this either you need to improve your earnings or
Reduce some of your expenses.
What are Savings:
The small amounts saved gradually will form lump sum or corpus which will help you to spend on large one time purchases like Buying a Car, house, vacation etc.
Saving is very important because it will help you in taking a guided decision. Lets look at a simple saving plan when you have financial planning in mind.
Savings Plan:
1. Make a list of things and pay for only which are basic and important, eg paying rent, utilities. For the optional expenses think twice before spending.
2. Start saving with small amounts and which is achievable – don’t aim too high
3. While purchasing shop around and Compare prices, go for discounted stores.
4. Plan for an Emergency Fund, which will help you in SOS ( Distress situations)
5. Learn to say No, if you cannot afford. Taking in instalments is the first step of overspending, it simple means you don't have money to buy the item.
6. Be Flexible with you plan and revisit often to make any changes if necessary.
How Much Money Should I Save?
Ideally if you want to become rich, you need to save 40% of your Income, Realistically 20% is fine when you invest back these savings in guaranteed Products.
How to Increase Your Income?
1. This can be done either by reducing your unnecessary expenses
2. or by Improving your income sources like taking up a part time job
3. Start a business with little or no investment
4. Partner or endorse business which gives you extra money.
Getting Help :
If you are in a doubt its always advisable to get expert advice from an Experienced Financial Advisor. Please call – 99 727 00 931 or fill in this form for a call back.