When the going gets tough, the tough get going. Lately the public discourse has been about how to make ends meet in a challenging economy. When the going is tough, you cannot continue business as usual. Financial prudence, or what many experts refer to as “a strict financial diet”, must be observed. Here are a few tips to help you save more, spend less, and fortify yourself in challenging times.

Save First, Spend Later

This is the golden rule of saving and investing. Never wait till the end of the month to save what’s left of your income. Start the month by securing your savings and investments – at least 20% of your income – and then spend from what’s left. This will ensure a strict savings habit, creating a platform of financial stability upon which you will create wealth.

Setting Goals For Yourself

You can’t achieve your life goals if you haven’t set any. It’s the same with your finances. You must set your financial priorities straight by deciding where your money should go. We all have short, medium, and long-term goals. Each goal requires financing. Therefore, invest small amounts towards the achievement of each goal. This would ensure strict investing every month, leaving you must less to waste.

Attack Discretionary Spends Mercilessly

Discretionary spends are non-essential spends. Left unchecked, these eat up a big chunk of your income. So, frugality is the way ahead. For example, you may spend Rs. 200 per meal on 10 meals ordered via a food delivery app instead of cooking at home which may have cost you Rs 50 per meal. Therefore, instead of spending Rs 500, you’ve spent Rs 2,000. Similar loss of savings may reflect in your other discretionary spends. To maximise your savings, try to settle for low-cost alternatives for your wants. Want to have a drink? Have it at home where it may cost you Rs 100 instead of Rs 1,000 at a pub. Want to watch a movie? Stream it online instead of spending at least Rs 500 on tickets, popcorn and beverages at a theatre. Reducing your discretionary spends will go a long way in improving your savings. If you’re able to move the needle from saving 20% of your monthly income to 30%, you’ll accelerate your savings and achieve your life goals faster.

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Follow The 7-Day Rule

Another version of this is called the 30-Day Rule. The essence of both rules is simple: delay your gratification. To be human is to have infinite wants. But satisfying our unlimited wants needs money, which is limited. Therefore, whenever you get the urge to spend your hard-earned money on a shiny new thing that has caught your eye, follow the 7-Hour Rule. If after 7 days, you still feel the strong urge to make the same purchase, then don’t deny yourself. If not, you would have saved yourself some money.

Calculate The Hours You Need to Work to Earn Back What You Spent

This is a way to supplement the 7-Day Rule. The next time you feel the urge to splurge, ask yourself this: how many hours of work will you need to put in to earn back the amount you’re about to spend? Let’s say you earn Rs 50,000 a month working 8 hours a day, 5 days a week, and you’re about to buy a second TV set for Rs 30,000. Assuming 22 working days in a month, you earn Rs 2,272 in a day, or Rs 284 an hour. It will require 105 hours (or 13 days) of work to earn that amount. If this is not palatable to you, you should resist the urge to make that purchase now.

Automate Your Bill Payments

Never lose a single rupee on late payment fines because that is a waste of money. To avoid late payments on your phone, credit card, internet, or utilities, automate their bill payments. For this, use your net banking, or debit card, or your UPI app. They will settle the bill well before the due date as well as last-minute hassles.

With these simple tips, we hope you’ll be able to save a little more money, and each rupee saved will help you speed towards your life goals. They say “every penny saved is a penny earned” for a reason.

(The writer is CEO, BankBazaar.com)