The reality is that day-to-day life is expensive. Bills must be paid, and the needs of the moment must be addressed. Frequently, however, people are reminded of the importance of saving money for a rainy day.
Pratap Kondamoori, a seasoned entrepreneur and expert in investing from Pleasanton, California, knows that saving money can be difficult. What is the smartest way to put aside a reasonable nest egg?
The truth is there isn’t a straightforward answer, but rather a series of small strategies that experts agree to work slowly, over time. Pratap Kondamoori shares a few tried and true methods that will help with putting aside money.
Make A Budget
Living within one’s means is critical. It pays dividends to sit down and create a spreadsheet contrasting monthly household income against monthly household expenses. If this has not been done already, the figures can be illuminating.
Using that information, one can create a reasonable monthly budget factoring in rent/mortgage payments, groceries, medical and pharmaceutical expenses, travel costs, and entertainment expenses while still leaving a certain amount aside to save.
Of course, the trick here is to stick to it, says Pratap Kondamoori. Anyone can create a budget, but it takes a certain degree of self-control to abide by it. Discipline and awareness of one’s spending habits are key.
Pay Down Debt
Albert Einstein once described compound interest as “the most powerful force in the universe.” There is no question that Einstein was an incredibly smart man, and though this quote was undoubtedly meant to be a little bit tongue-in-cheek, as matters of personal finance go, he is not wrong. If a person has outstanding loans of any kind, it is enormously advantageous to pay them off as soon as possible before the interest accrued makes them far more expensive than they ought to be.
It is challenging to save a meaningful amount of money if debts are allowed to spiral out of control. If one doesn’t have any outstanding loans, it is wise to avoid them or to use them only strategically, as a method of mitigating risk or building up a personal credit rating.
Keep An Emergency Fund
There are very few things that can be counted upon in life, but one of them is that eventually, a costly emergency will arise. Perhaps a car breaks down at an inconvenient time, an unanticipated home repair is urgently required, or a spouse loses their job resulting in a significant reduction in household income.
The details of these kinds of situations are impossible to predict—but they do happen to almost everyone at some point. According to Pratap Kondamoori, this is where an emergency fund becomes crucial. Being able to weather a financial storm without incurring additional debt is essential not only to effectively save money but to just remain solvent, overall.
Use Credit Cards Responsibly
Credit cards are double-edged swords. They can be wonderful things, or they can be the last nail in a person’s financial coffin — it all depends on how they are used. Because of the hefty interest rates attached to most cards, it is usually unwise to carry a balance.
A handy guideline to keep in mind is to not use a credit card for purchase unless there are already funds available to immediately pay it off. Many savvy consumers do just this, effectively using their credit cards to accumulate rewards points while never incurring the penalties for carrying a balance.
Final Thoughts From Pratap Kondamoori
By following these simple strategies, any individual or household can put themselves on a slow and steady path to running a monthly surplus and saving that money for whatever is important to them.
Here’s one last piece of solid, overarching advice from Bob Kondamoori: avoid buying drinks at bars and only eat at restaurants sparingly. That alone will save you hundreds of dollars in the short term and countless thousands in the long term. Good luck and happy saving!
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