how to save money?

3 steps formula to save money and 2 tools to track expenses

One of the person messaged me on my blog that he has saved 100000 Rs in his saving account. I told him that Keeping money in saving A/c is neither saving nor investing, your money is diminishing from time to time.

When you get return equals to inflation, then you can say that you are saving money. Any return more than that is investing.

Saving is delaying gratification for future consumption.

Why you should save money?

  • For retirement
  • Future goals
  • Emergency fund planning
  • For vacation

3 Steps formula to Save money.

Before Saving money, you should be aware of the nature of expenses you are incurring.

Step1: Create of a list of your monthly expenses.

  1. SIP/Investments
  2. Insurance premium
  3. Rent
  4. Bill Payments:
    1. Electricity
    1. Phone
    1. Gas
    1. Internet
    1. On-demand TV- Amazon, Netflix
    1. Water
  5. Children expenses
    1. Schools fees
    1. Toys and other
    1. Books
  6. Transport:
    1. Car bike maintenance
    1. Fuel
    1. Cab/auto
  7. Household
    1. Food
    1. Cleaning
    1. Groceries
  8. Health
    1. Doctor visit fees
    1. Medicines
    1. Other
  9. Shopping
    1. Clothes
    1. Electronics
    1. Gifts
    1. Books
    1. Others
  10. Travelling
    1. Hotel
    1. Flight/train
    1. Other costs
  11. Other miscellaneous 10expenses

I have provided you a list of expenses you can use.

Steps2: Divide your expenses into 3 categories: Fixed, Variable and Seasonal.

Fixed Expenses: Expenses which are generally same each month. It includes expenses like EMI, Rent, Household expenses, school fees

Variable expenses: This are the expenses which are difficult to predict It may include expenses like entertainment, gifts, shopping, travelling.

Seasonal expenses: This expense may incur twice, thrice or even once a year. This are uneven expenses, which are unpredictable. But some are in fixed nature at a definite interval. Examples: Car repair, schools fees, insurance premium.

Step3: Savings = Total Income- Total expenses.

Calculate what is your monthly saving rate. Check from your saving, how much goes in SIP and other investments.

Saving money is not important, making your money work for you is important.

50/30/20 Rule

50% of your income should go towards essential expenses like food, utility bills, education, Rent, EMI etc

30% should go towards long term savings. Long term goals may be like retirement, children’s education and other long term goals(more than 5 years)

20% is something that can change your saving pattern. It includes all discretionary expenses that can be avoided. It includes going on a vacation, cell phone, gym membership, dining out with friends, entertainment etc.

How I save money?

Earlier It was too difficult to track my expenses and savings.

I have tried different approaches to this. I will discuss the best one that worked for me.

For tracking expenses:

There are many ways like writing down in an app the moment expenses incurs. I tried that, but I didn’t even follow for a day.

So, what I do is:

  1. Every day an alarm is set at 11:00 pm for writing daily expenses.
  2. It will not take more than 10 minutes to write down all your expenses. This will also help you to remember all your day to day activity as well.

You may be following other methods to track your expenses. Important is to track, the method may be different. Experiment, try out a different way.  You will find the one that suits you the best.

Tools to track expenses

I have tested many apps for tracking expenses. I am mentioning only apps which I found to be useful.

ET Money

It is one of the best personal finance app now. It is damn easy to track expenses in this app. It also allows you to invest in mutual funds.

Capture - 3 steps formula to save money and 2 tools to track expenses

Following are the features of this app:

  • Monthly, weekly, and daily report
  • Bills setup and payment
  • Ability to analyze existing investments
  • Track your payments through SMS

Due to this, many expenses will be tracked automatically. You don’t need to track it manually.


You can use FinArt if you don’t want any extra feature like investments and deposits, expense tracking through SMS. FinArt is simple and easy to use expense tracker. It does not have all the features compared to others. But its simplicity beats other apps.

B612 20170602 164936 - 3 steps formula to save money and 2 tools to track expenses

I have found both this app to be useful. You can try other apps and see which is suitable to you.

I have provided a list of only 2 apps. Else you will just analyze and not take any action.

Final Words,

Follow the above-mentioned steps. Saving money will be quite easy for you.

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Jigar Chavda

Passionate young guy for personal finance, wealth creation and marketing. He is following his dream and passion to be writer, speaker, blogger and advisor.

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