Find the answer to the question that’s been on every salaried individual’s mind forever!
Saving every month consistently from your salary might look like a herculean task, especially if you’re still dealing with debts (student loans, credit card bills) or other dependencies. Empowering yourself with the know-how and tools to save for a secure financial future is a must and getting into a savings ritual can help alleviate your stress in the current times.
Let’s deep dive into how to get into a savings routine and set some realistic goals for yourself so you can keep on track.
How much money to save every month?
Have you ever noticed–no matter how much the salary, everyone seems to be stressed out about their financial situation! It’s most probably because our spending habits also change along with a salary hike–people start spending more. In fact, it should be the other way round, the excess income should go into savings without major changes in the way you spend your money.
So how much money exactly should one save every month? There are several formulas and budgeting tools to arrive at a number, the most popular one of them all is the 50/30/20 rule to allocate your salary. Keep 50% of your salary aside for your monthly essentials and bills, 30% for your spending, and 20% of your salary should go towards savings every month.
Following the 50/30/20 pattern makes sure that you save a sufficient amount every month along with the freedom to have some fun and enjoy things you love without falling back into bad spending habits.
How much money to save every month?
If you’re looking for a game plan to help you save money from your salary, look no further. Here are 5 simple steps to get you started:
- Analyze your salary : To begin with, go through your payslip and check your take-home salary so you know how much you have to work with. Your take-home salary is the amount left after your employer deducts taxes, Professional Tax, Health Insurance, House Rent Allowance (HRA), Provident Fund (PF), and any other contributions such as Voluntary Provident Fund (VPF), etc. Once you’ve got these numbers, you can further divide your take-home salary amount more accurately.
- Analyze your budget and expenses: When dealing with monthly expenses, the next step in getting organized is to budget your expenses. Laying out your expenses – fixed and anticipated – is a good starting point, and it can easily be done in a spreadsheet or with a budgeting app. Defining your budget will give you an idea about how to realign your expenses and you can accordingly plan your savings. Depending upon your lifestyle, you may categorise your expenses into:
- Housing: Rent or mortgage, Property tax, Household repairs, Housing society maintenance charges
- Transportation: Car or bike loan payment, Petrol, Servicing
- Food: Groceries, Restaurants
- Utilities: Electricity, Water, Gas, Phone, Internet, Cable
- Clothing & Accessories
- Healthcare: Primary care, Specialty care (Dentists, Ophthalmologists, Dermatologists, etc.), Emergency Care, Medications
- Insurance: Homeowner’s or Renter’s insurance, Auto insurance, Health insurance, Life insurance
- Debt: Personal loans, Student loans, Credit Cards
- Household supplies: Toiletries, Cleaning Supplies, Tools
- Personal: Memberships, Salon services
- Travel: Airfare, Train fare, Local transportation (taxis or buses), if driving – petrol and toll, Accommodation, Entry tickets for attractions, Meals, Shopping for souvenirs
- Entertainment: Movies, Games, Concerts, Subscriptions (Netflix, Amazon Prime, etc.)
- Gifts or Donations: Birthdays, Anniversaries, Farewells, Festivals, Weddings, Other special occasions, Charities
Once you hash out all these expenses, you’ll get a fair idea of which expenses are “needs”, and which ones are “wants” that can be easily cut down.
Figure out where the biggest chunk of your salary is spent and if that expense can be trimmed down to free up some cash to be put aside towards savings.
Assess your utility bills, memberships and subscriptions that you don’t use regularly and can be changed to a lesser expensive one.
Build an Emergency fund and keep aside a set amount regularly for unforeseen conditions. Even if it means starting with ₹500- ₹1000 monthly and gradually increasing it as your salary increases.
3.Minimize debt expenses: There are a few ways to do this:
- Get organized and list all your debts along with their balances, interest rates, and minimum payment periods to assess how much you owe every month
- Budget for loan repayment every month so you don’t fall for impulse purchases
- Automate your credit card and EMI payments so you never miss a payment or have to pay late fees or penalties ever.
- Pay the full amount due on your credit card bills every month to avoid accumulating debt.
- Talk to your creditors to refinance your loans to a lower interest rate.
- If you have existing loans, try setting up the most trusted debt snowball strategy to tackle them.
4.Explore alternate sources of income: If you find yourself continuously falling short of your savings goals, it’s high time you look for increasing your income.
- Upskill to get a job with a higher salary
- Try converting one of your hobbies into an earning gig over the weekends
- Sell unwanted stuff lying around the house, like your old books, clothes, sports equipment, etc.
- Get into a regular investing habit. Start small with spare change investment and SIPs (Systematic Investment Plan). Make SAVE.INVEST.GROW your go-to mantra.
5.Set up an automatic transfer to your savings account: If your salary gets credited to a salary account set up by your employer, consider getting yourself a high interest rate savings account that is also a zero balance savings account. Set up auto-transfer of your salary to your savings account to earn maximum interest without delay.
How to make 20% of your salary work towards your monthly goals?
So far, we discussed how to save 20% of your salary. Let’s see where to put this money so you can efficiently reach your financial goals:
- Your savings account: If you are new to saving, set smaller achievable goals for yourself and increase them gradually as you comfortably get into the 50/30/20 model. Aim to have at least 3-6 months of your monthly expenses, if not more, in your savings account at any given time for emergencies. This is a good rule of thumb to start saving but ultimately how much to save each month depends on your lifestyle and spending habits.
- Your retirement account: Start saving towards your retirement as soon as possible. Experts advise saving at least 15% of your gross annual income (including employer contribution) towards your retirement every year. If you save more, all the better.
Contributing to tax saving-cum-investment schemes is the best way to make investments and claim deductions. ELSS (Equity Linked Savings Scheme), NPS (National Pension Scheme), ULIP (Unit-linked Insurance Plan), EPF (Employees’ Provident Fund), PPF (Personal Provident Fund), VPF (Voluntary Provident Fund), etc. are a few tried and tested solutions you can start with.
NiyoX Salary Account
Niyo in partnership with Equitas Small Finance Bank brings you NiyoX, 2-in-1 account is a feature-packed digital savings account and wealth management platform that makes it your best choice for a salary account
Benefits of NiyoX Salary Account
- Paperless onboarding: With no more bank visits, waiting in long queues, or confusing forms to fill out, the instant 100% digital account opening process ensures you can open an account 24X7 from anywhere. You can have access to a brand new account in less than 100 seconds — opening an online salary account couldn’t get easier than this!
- Minimal documentation: All you need to open your NiyoX account is your PAN, Aadhaar, and access to your Aadhaar-linked mobile number
- ZERO balance account: With no need for maintaining an AMB at any point in time gives you the freedom to operate your account without any strings attached
- Best-in-class 7% interest* p.a.: It ensures gentle yet steady growth of your account balance. Turning your savings account into a salary account will help you build enough balance to earn the 7% interest rate annually.
- Instant debit card: Your NiyoX account comes with a nifty virtual VISA Classic Debit Card that can be used for all online transactions, the moment you open your account
- ZERO forex markup*: Banks usually charge a fee (up to 3%) on the total amount of an international transaction. Niyo doesn’t charge you any fee for the convenience of making international payments. Only the VISA exchange rates apply to all your spending abroad. This helps in saving big on your overseas payments.
- Enhanced flexi-card controls: The physical VISA Platinum Debit Card comes with custom card controls right within the app for enhanced security of your account. You can temporarily lock/unlock your entire card or individual channels (Online Transactions, POS Swipe, ATM Withdrawal, Tap & Pay) for both domestic and international payments. You can even block the card permanently if it gets lost/stolen. The Tap & Pay feature for contactless payments ensures faster payments at checkouts.
- Multi-format account statement: You can download/email statements within the app in your desired format (PDF, XLS, CSV) for ease of analyzing your expense pattern and making habitual changes if needed
- Mutual fund investments: NiyoX is a 2-in-1 account with a DIY wealth management platform that offers ZERO commission on all direct mutual fund investments within the app. The curated list of recommendations and market research makes it easy to get you started with your investments.
- Micro-investing with spare change: The Invest the Change feature within the app gives you the opportunity to save and invest small amounts in a mutual fund of your choice. All your spending can be rounded off to the nearest ₹10/50/100 and the accumulated spare change can be invested with the fully-automated hassle-free process within the app. When you use your salary account for your everyday expenses, you’ll accumulate enough spare change to invest small chunks of money effortlessly.
- Import portfolio: You can import your external mutual fund portfolio and track it within the same app.
- Referral Rewards program lets you introduce your family and friends to experience NiyoX digital banking and get you both exciting incentives
- The exclusive in-app offers and discounts on leading brands help you get the best of what your favourite brands have on offer for you
These are just a few of the many ways a NiyoX digital Salary Account can make managing your finances easier while you save and invest within one app. New features are added continually to enrich your digital banking experience and make your NiyoX salary account a one-stop account for all your financial service needs.
With a new account opening every 30 seconds, NiyoX has gained popularity with more than 10 lakh users onboard since its launch in March 2021. With accessibility to serve more than 26,000+ pin codes across India, NiyoX strives to provide banking services to salaried personnel across the width and depth of the country.
How to open a NiyoX Salary Account?
Opening a NiyoX digital salary account is very easy. All you need is your PAN, Aadhaar, and access to your Aadhaar-linked mobile number.
Once you’ve onboarded NiyoX, you can share your account details with your Human Resources (HR) Team with a request to switch your existing salary account and credit your salary to your NiyoX account.
The NiyoX salary account also comes with a 12-month Salary Rewards program with exciting monthly cashback. Explore salary rewards within your NiyoX app.
Does your employer provide a salary account with another bank? Worry not, we’ve got you covered. Check the NiyoX app for more details on how you can earn salary rewards too.
If you are on the lookout for the best bank for a salary account, look no further!
What if I can’t save 20% of my monthly salary?
If you find it difficult to save 20% of your monthly take-home salary, start small with ₹500/1000/2000 or more– whichever works for you and increase as your salary increases. Over time this will help break the cycle of living salary to salary every month.
Where should I keep my savings?
For short term savings goals consider keeping your money in a high-interest savings account that’ll give you flexibility in terms of access to your funds in case of emergencies.
Ready to accelerate your savings? Open a zero balance, high interest digital savings account with NiyoX. Convert it to a Salary Account by crediting your salary directly to your NiyoX account. This will make it faster to earn the best-in-class 7% interest* p.a. With interest calculated on the daily end-of-day balance.
How much money should I keep aside to invest each month?
There is no specific amount when it comes to investing.
You can explore options such as low-risk investments, index funds, and bonds on NiyoX. Before making an investment, evaluate which option could benefit you in the long run.
One way of doing it is to start small. The Invest the Change feature on the NiyoX app lets you save and invest small amounts in a mutual fund of your choice. All your spending can be rounded off to the nearest ₹10/50/100 and the accumulated spare change can be invested with the fully-automated hassle-free process within the app. When you use your salary account for your everyday expenses, you’ll accumulate enough spare change to invest small chunks of money (as less as ₹100) effortlessly.
Additionally, you can budget a certain amount towards investing every month and invest through SIPs (Systematic Investment Plan) within the NiyoX app to build a regular investing habit. SIPs on NiyoX start at just ₹100.