Budgeting
The first step in spending your salary wisely is to make a budget and stick to it. Make sure that you are tracking your income and expenses, including recurring costs like rent, food, electricity, commuting and insurance, as well as variable spending on things such as entertainment and dining out. Use a simple framework such as the 50/30/20 rule to guide your budgeting, which allocates 50% of your after-tax income to needs, 30% to wants and 20% to savings and debt repayment.
Review Paychecks
A good way to understand your spending habits is to review the money that lands in your bank account at the end of the month. It is a great way to see how much you actually spend and make a course correction. For instance, if you notice that you’re Swiggying too often or buying subscriptions you don’t need, you can start cooking meals at home and cut down on unnecessary spending. You can also use apps such as N26’s Insights feature to track your spending and make better decisions about where your money should go.
Cut Unnecessary Spending
It can be easy to spend money on things that don’t truly benefit your life or long-term financial security. This could be anything from a takeout lunch to new technology. Identifying unnecessary spending habits can be challenging, but there are some relatively painless ways to cut back.
For example, try to avoid using shopping apps or signing up for retailer emails with sales alerts. This can help reduce impulse purchases and overspending.