How to Save Money from Salary Every Month: 5 Smart Ways to Build Wealth

Does your bank account run dry just a few days after receiving your salary? Do you often struggle to save money each month? If you are a salaried employee and find it difficult to save consistently, you could end up facing financial stress in the future. The amount you should set aside every month depends on your earnings, but the bigger question is: How to save money from salary?

In this blog, we will share five ways to build wealth. Follow these tips, and you will be amazed at how much you can accumulate over the years.

5 smart ways to build wealth

The first step towards building wealth is saving. Whether your monthly income is ₹50,000 or ₹3 lakh, setting aside a portion of your salary is an essential for financial planning. Saving helps build a corpus and ensures a financially stable future for you and your family. Start small but be consistent. Over time, you can gradually increase the amount you save.

Here are five smart ways to save money from your salary and build wealth:

1. Follow 50-30-20 rule

If you are wondering how to save money from salary every month, this simple rule is what you need to follow. It breaks down your income into three parts:

• 50% for needs: Spend 50% of your salary on essentials such as groceries, rent, utilities, medicines and transportation.

• 30% for wants: Allocate 30% for lifestyle expenses such as entertainment, shopping, dining out and vacations.

• 20% for savings and investments: Reserve the remaining 20% for your future. Invest in mutual funds, stocks, ETFs, retirement plans or fixed deposits. Over time, this portion will grow into a solid corpus that can help you achieve your financial goals.

As your income increases, try to increase the percentage you allocate to savings and investments.

2. Create a monthly budget

Creating a monthly budget helps you cut unnecessary expenses and make room for more saving. Separate your expenses into categories such as fixed costs, needs, wants, savings and miscellaneous expenses. Stick to this budget throughout the month to avoid overspending. Review and update your budget regularly to ensure you are on track with your financial goals. Budgeting provides a clear picture of where your money goes, helping you stay disciplined and focused on building wealth.

3. Set financial goals and create a plan

If you are planning to build wealth, it is important to set clear financial goals. Whether you want to save for children’s education, for your retirement, or for buying a home, you must have a measurable plan or strategy to meet the goals like investing in assets which guarantee good returns, increasing your earnings, etc. After creating the plan, you must also track its progress and make necessary changes, if required.

4. Track your finances

Have you ever wondered why you are not able to save as much as your friend, or perhaps even much less than them? One reason could be that you are not tracking your spending effectively. When it comes to how to save money from salary, the first step is to track where your money goes.

Here’s the tip: classify your expenses into two categories – fixed and variable. Break down the variable expenses further into essential expenses and avoidable expenses. While basic groceries, house rent, utilities etc come under fixed and essential expenditure, commuting to work, clothes will fall under variable but essential. Variable but avoidable costs include dining out, vacations, etc.

Another way to track your spendings is by downloading a money-tracking app and updating your expenses every day. The data will tell you whether you are on track or going overboard with the spendings.

5. Start investing

Investing in the right instruments will help accelerate your savings. Stocks, bonds, mutual funds, fixed deposits, Public Provident Fund (PPF) and National Pension Scheme (NPS) are some options that you can invest in. However, before investing, research the best options that can help grow your wealth over time. Your investment portfolio should be well-balanced and diversified that aligns with your financial goals and risk tolerance.

Final thoughts

No matter how much you earn, setting aside a portion of your salary for savings and investments will help grow your wealth over time. Incorporating the above-mentioned tips on how to save money each month from salary can seem challenging at first, but it will gradually become a habit as you begin to witness the power of compounding. Start saving as early as possible to build a strong financial foundation.

Read more:

How to Invest in Stock Market
How to Start an SIP Investment in India