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Striking A Balance Between Spending And Saving

Here are some steps that can help you strike a balance between saving and spending

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“Do not save what is left after spending; instead spend what is left after saving.” 

― Warren Buffett

Saving money is not a concept that comes naturally to people. In fact, it is much easier to spend money on things we would want to purchase rather than the need to purchase, which is why most people find saving a challenging task. 

Sprinter Marion Jones, Sydney Olympics medallist after a blazing career and signing a multi-million dollar deal was down to her last 2000 dollars. In 2007, she was declared bankrupt and was forced to sell her property. Celebrities are set apart merely based on their fame and income pattern but overall, the general population is no less susceptible to such a dire future.

One tends to buy all the comfort and happiness that they can with hard earned money, but you shouldn't just live in the present. One should be able to enjoy the money in the future as well, for which they need to save. It is easy to lose the money you make. But if one takes time to create a budget after recognizing their finances, organizing the spending and managing debts, there is a massive possibility for them to achieve their long-term financial goals. 

Here are some steps that can help you strike a balance between saving and spending:

Know The Cash Inflow: The first step would be to identify the amount of money you make every month i.e inflow of cash. It is easy to think that things as affordable once you look at the entire salary and forget to subtract the deductions. While creating a budget sheet make sure you update the cash inflow as the in hand salary, post the deductions.

Track your Spending: There is a systematic way to track your spending. Categorize the spending to recognize where can adjustments can be made. Identify where the cash outflow is maximum and take measures accordingly. Start by listing all the fixed expenses, monthly bills, rents, utilities, etc. to have a fair idea of how much you're left for other expenses and what can go in the savings account.

Set Goals: List your financial goals and divide them between short-term goals, medium-term goals, and long-term goals. Short-term goals are the ones that are achieved in a year, medium-term goals in 2-3 years, and long-term goals take more than five years to accomplish. Prioritizing all your goals will help you list them in the categories automatically.

Make a Plan: Once you have accurately calculated the inflow and outflow of the cash and mapped the spending habits, you can further break down your expenses. Your daily and monthly expenses like subscriptions, number of outings, etc. can be cut down a little which doesn't affect your lifestyle and allows you to save a little. Remember small savings here and there make a huge difference. Plan how to save through little cut downs. 

Regular check-ins: The last step is to review the budget regularly. Compare the budget sheets and witness the progress you have made. With every increment, make sure you save a little more. The aim should be to raise your savings making enough corpus for your future endeavors.

One can use the "Pay Yourself First” concept to save enough money. Set a savings target of 15-20% of one’s gross annual income to deploy it productively in investments, cash, debt, equity or real estate. One can start saving a smaller percentage if they have the necessary expense and can't save 15% of the annual income. But as you grow professionally, make sure to increase the percentage of the savings along with it. The approach has proven to be successful in helping a lot of people save and achieve their financial goals.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Amar Pandit

Amar Pandit is an electronics engineer, who started working with TCS. Later he moved to the US, post TCS, and started working with Infrasoft Technologies. He is one of the top most practicing Certified Financial Planners in the Country and is a member of Financial Planning Standards Board, India and Financial Planning Association, USA. In March 2015, Amar founded My Life… Happily Documented, an enterprise which enables families to keep their confidential and other important documents safe and easily accessible using technology.

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