I Can’t Save Money

There is simply not enough money to spend. How can I even think of saving? Perhaps when I get into a decent job, earn more and marry a working spouse.

Well, if only things were so straight. There is no Best way to save, except one. Start NOW.

My friend’s father said there’s a thumb rule. Save 25% of your total earning, invest 20% and donate 5%, if you can. The rest 50% can go into your loans, routine expenses and that ‘thing’ you always wanted to buy (one at a time). And as I said earlier, if you don’t need to buy something after a couple of days, you probably don’t need to buy it at all.

While we may not be able to strictly follow this, aim to come close. After all, you need to think of your insurance, investments, dependents, retirement and most of all, enjoying Life (travel, car, farm-house, home theater, library or whatever).

Everybody wants to make more money

Nothing wrong with that – in fact, it’s absolutely good thinking. We sort of figure out how to do that, and sometimes just go blank. “What can I do?”

Hewlett-Packard (HP) is a great company. It’s big. It’s around the globe. And it had it’s problems. When Mark Hurd came in as the CEO, his task was cut out. HP was making money in some areas, but not much or losing in others. They figured there were too many people doing the same kind of work. Money was spent unwisely. There was not much focus in business areas. Too many layers.

They figured HP was making money, but was also spending too much – which made the net profit margins smaller. As the first measure, they began cutting costs – by reducing redundancy and bringing in efficiency. That didn’t mean no spending – they bought a few companies which made sense for future business. They invested in additional business areas. They scraped loss-making ventures. Today, HP and Mark are being hailed for turning around the tables. And they will sure have more things to do.

There are a lot of things to learn from how companies are run. Everyone of us is running a company – it’s You. There’s not much of difference in terms of – setting goals, thinking ahead, making mistakes, loss and gains. It’s just that we focus too much on earning for the companies we work for and are a little lazy when it comes to working for our own goals.

Making money involves the same set of strategies that HP or any other company uses. Think of all the ways you can avoid spending money. Think if we really need it. Think if we can live without it for a couple of days – if the answer is yes, we may possibly don’t need it, or we could buy it when there are cash reserves in our bank accounts.

Save. This one has been said too many times, by just about everyone we met – but surprise. Not many of us save regularly. That includes me as well. I know I need to save for my wedding, for my car, for my house, for my kids, for my retirement – but. There’s always a but. Just start allocating any amount every month as your savings – never mind even if it’s a few 100s. And don’t spend it – just think it’s not yours.

Diversify. Once you’re comfortable with the two of the above, you’re ready to go to the next level. Apart from your regular work, think of your passionate interests/hobbies. Or find something that excites you. See if you can make a habit out of it. See if you can find ways of making money out of it. Sometime or the other – it may yield dividends. It may take years, and it may not work out at all. The point is to think, try and focus. The coming days will see the jacks-of-all-trades thriving much better than the masters/specialists. But then, that’s a topic for some other day.

Write everything down. This one makes a difference between successors (or something close) and those who just thought/tried it. You need not write code to create software to log your entries. Just a pen/paper or a notepad will do.