How To Save And Invest Your Money To Become Rich


Financial crisis is not unknown to the men of the modern society. Financial crisis can strike anyone at any moment due to misfortune or bad career decisions. But what amazes me more than anything is that even people with steady income or sizable salaries often complain about monetary problems.

When I started working, I almost never felt that I was not in control of my money. The scenario was completely opposite with most of my colleagues and friends. By the 20th day of every month, they would start looking forward to the next payroll. By observing their habits, lifestyles and financial decisions, I have identified some basic dos and don’ts that can make or break your bank balance.


1) Set Aside At Least 20% Of Your Salary For Savings

Some great philosophers like Confucius and Socrates had instructed people to save at least 10% of their salary if they wanted to be rich. But gone are those days. It is the modern world with skyrocketing inflation rates. Unless you can save at least 20% of your earnings then even after a few years of job you will stay penniless.

Putting aside the money is the first thing you should do once you get your payments. You can open a different bank account for this money. Do not touch this money under any circumstances unless it is something serious. One strategy I followed was to open an account without an ATM card. So my savings are kept there and I cannot take the money out in a moment of temptation using an ATM.

2) Identify The Areas Where You Spend Too Much

If you have a decent salary and still cannot save money then you definitely have the habit of spending too much. It can be in the form of clothes, shoes, drinks or anything else under the sun. But the bottom-line states that you will need to cut back on unnecessary expenses. Now it is something much more easily said than done. I follow a method that helps me cut back on my expenses

a) Maintain an expenses sheet. It can be on paper or an Excel file. Starting from the 1st day of next month, at the end of each day write down the amount of money you spent and where you spent them. Of course since this is your first time keeping a journal, you will forget to update it sometimes. But still at the end of the month, you will have a more than decent idea about the areas where you spend too much money.

b) Cut down on the expenses by planning. If you spend too much at bars, try buying your own liquor and drink at home at least 2 days per week. You will be amazed by the savings. Do not eat too much junk food or restaurant food. You will stay healthy and home cooked food will always cost less than outside food.

c) When you go to a super market, make a list of the things you want to buy. Focus on only buying the items on the list. It is quite easy for the mind to get distracted in these places and we end up buying hundreds of items we do not need. Take action to stop that now.


3) Manage Your Credit Cards Carefully

Credit card is one of the best and worst inventions of the last century. On one hand, it makes necessary but costly items affordable for us and on the other hand, it entices us into buying things that we should not buy unless our incomes increase. In fact, a single month of credit card abuse can lead a whole year of careful savings astray. So before you whip out your credit card, remember the following:

a) Sooner or later you have to pay for whatever you buy. Credit cards create the illusion of cashless purchase but always keep in mind that you will have to pay the money after a month.

b) The credit card bill should not be more than 10 to 20% of your monthly income. If it is more than that then try to convert payments into monthly installments.

c) If you pay just the minimum amount then credit card companies charge interest on the remaining. This way after a few months of minimum amount payments, you will find that your credit card bills are increasing instead of decreasing.

d) Delayed payments incur huge amounts of penalty charges.

4) Invest your savings into government savings schemes.

These schemes yield low interest rates but very offer good safety. If you start saving at a young age then by the time you break your savings, there will be plenty of money accumulated. Never underestimate the power of compound interest. Just keep saving and keep adding more money to your investment portfolio.


5) Beware Of The Stock Market

If you decide to venture into the stock market, research thoroughly. The stock market has rid money people of their hard earned money. Read this article to understand the risks associated with stock market investments.

6) Do not count your chickens before they hatch.

If you are supposed to get a payment, let it reach your bank account before you spend any money. Often people spend heavily as they are waiting for a large payment and if the payment gets cancelled then their finances get completely messed up. Do not fall prey to this common mistake. Remember what I say, “Money that is not in your hands is never your money.” So plan accordingly.

I hope this article helps you in saving up for future and invest in profitable financial vehicles. If you have some tips to share or want more information about any of these ideas, reply to this page. I will be more than happy to discuss with you. It is not difficult to save money if you plan your expenses properly. Follow the steps in this article and start a journey towards financial freedom.

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Soumyajit DasMazumdar
Soumyajit is an SAP technical consultant with a flair for writing. An avid blog reader, he started off with a free WordPress blog and slowly moved to his own personal news and blog site. Apart from writing he loves reading books, playing table tennis and long bike trips. He is currently trying to learn playing guitar and failing miserably.

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