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DateLine Sunday, 25 May 2008

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Wanna save money?

Here are ways to budget for more:

If you thought this was yet another sermon (so oft repeated by parents) on the need to spend less and save more, fear not. Do spend, for it is spending that keeps our economy chugging! Just ensure that you plan and discipline your spending to ensure that your ability to spend lasts longer.

Big buys

When was the last time you actually planned and saved to finance a big ticket purchase? Believe it or not, this may help you upgrade to a swell phone or buy an ipod, possessions that seemed out of reach not too long ago.

All you need to go is prioritise your spends, cut down on those petty expenses that would take you nowhere and instead save up for the mega-purchase.

Even a few thousands saved on eating outs or on your 15th noodle strap top may go a long way in building your nest egg for the big buy. After all, owning an i-pod or a laptop that rocks you may be worth the small sacrifices.

However, putting aside your money towards savings it is not enough, if you let them idle. As time literally is money, try and invest any surplus in investment avenues. If you plan a purchase after three or five years, cultivate the habit of ploughing savings regularly into a recurring or term deposit with your bank.

If you already have a bank account, consider switching to one with add-on features which automatically "sweep" any surplus into a term deposit, which earns a higher interest rate.

How to invest

Mutual funds do allow you to invest as little as Rs.500- 1000 to start with and also allow you to take out your money whenever required. The few thousands that you save may multiply even faster if you invested the same, leaving you with a larger sum than you bargained for! Of course saving for a mega purchase also means budgeting for your regular day-to-day expenses.

After all it's tough to cut on your room rent and phone bills.

So arrive at your surplus after making room for the daily expenses and other fixed commitments (track the average spending pattern by making a list of routine expenses).

Avoid impulse spending on stuff that you may not really want or those that would be lying with the junk crammed under your cot. Listing out your requirements before you visit a department store and cutting down the weekly visits to the mall may help!

If you thought a credit card is an easier way out of all this tedious scrimping and saving -think twice. Unless you have sufficient funds in your bank account to pay for your credit card bills you may be in for trouble. Many a time the credit card provider would offer you to an easy EMI (equated monthly instalments) facility to enable big purchases.

Beware, the interest charged for such facilities may burn a deep hole in your pocket. It makes better sense to use the credit card facility and pay the amount before due date in one shot. But for this, you need to keep your bank account flush with funds. How do you do that? Budget your expenses and save up for the big day!

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