If you are a victim of salary cuts, there’s a good chance you have been discussing and debating how to cut back on expenses.
Here are some expenses you’ve probably considered scaling back:
- Ordering in (formerly known as “eating out”)
- Expensive purchases
- Your favorite brands
- Domestic help
The problem: Cutting back on these expense heads impacts one’s life and lifestyle. One aspires to move forward, and this is a few steps back. It’s demoralizing and upsetting.
While it may be necessary to take the above measures and perhaps even some tougher ones; here are six ideas that save money, and don’t cause any pain.
They can all be done sitting at home. Most, within a few minutes.
This is relevant to those who have post paid plans. Mobile plan rates have dropped dramatically in recent years, yet many of us continue to pay high mobile bills.
Tip: If your monthly mobile bill is more than Rs. 500, you’re probably paying too much.
We believe the cheapest plans, with 40GB of data, is more than sufficient for 99% of us.
Changing mobile plans is fairly easy. Just download your service provider’s app and navigate to “change plan”. You can even do this from the respective websites. Your plan will change immediately.
Time taken: 5 minutes
Potential annual savings: Rs. 3,500 — Rs. 6,000
The story is pretty much the same here. Most people overestimate their data consumption. They play it safe and subscribe to expensive plans which have high data limits.
Tip: If you’re paying more than Rs. 1,000 for landline and broadband, there is scope for savings.
The last two months have seen our households at heightened data consumption levels — thanks to all the video calls and the extra time spent on Netflix etc.
We are on the cheapest plans and our data limit didn’t get breached.
The 799 plan from Airtel and the 699 plan from MTNL should work perfectly.
Changing your broadband plan (at least with Airtel) will involve calling the customer care number. Prepare for being seriously dissuaded.
Time taken: 10 minutes
Potential annual savings: Rs. 5,000 — Rs. 10,000
You can now pay only for the channels you watch.
Most households shuffle between 20–30 TV channels. Why pay for 200?
Why pay for the SD and HD versions of a channel ?
Apart from allowing us to select only our frequently watched channels, Tata Sky allowed us to pick different channels for different TVs in our house.
We do have peculiar TV watching habits. News and General Entertainment is watched in the bedroom. Sports and Movies are watched on the slightly bigger TV in the living room.
We chose channels accordingly. Our monthly DTH bill fell by around Rs. 700.
Log on to your service provider’s website, make the selections and see your bill drop.
Time taken: 15 minutes
Potential annual savings: Rs. 3,000 — Rs. 8000
4. Mutual Funds
Direct mutual funds have been around for some time now. More can be read here.
The greatest benefit of investing in Direct plans of mutual funds is the saving on commissions.
A few facts about commissions:
1. You pay them every year
2. Whether you add to your investments or not
3. Till the time you hold your investments
As a result, one ends up paying a serious amount of money in commissions over the years.
Tip: For every Rs. 1Lac invested in equity mutual funds, you are paying roughly Rs. 1,000 in commissions every year. The commission increases as the value of your investments increase. Do your math and decide if shifting to direct makes sense.
Before you proceed:
- Identify a reputed advisor who charges a flat fee.
- If you are a Do-it-yourself investor, identify a direct platform. We invest via MFU. Or you could invest directly from the websites of the mutual fund houses. Remember to select the “Direct plan” option.
- Take note of exit loads before exiting your regular funds. You can get a copy of your transaction statement from here. Then go to value research and individually check the exit load for each of your funds. Some units held by you may attract an exit load.
- Take note of capital gains before exiting. Remember units sold within 1 year attract a tax of 15% on gains. Units held over 1 year attract a tax of 10% (capital gains up to 1 Lacs is exempt from taxation in this case).
Time taken: 2–3 hours
Potential annual savings: Tens of thousands, maybe even Lacs.
P.S. If you find this daunting, drop us a note and we’ll assist you.
If you regularly pay your bills (mobile, landline, electricity, credit cards) late, you’re probably paying a lot as penalty and interest charges.
Many of our customers did so, before coming onto AutoFi. Use our free service, and stop unnecessarily paying more than you should. AutoFi relieves you off the headache of tracking bills and payments.
Time taken: 5 minutes.
Potential savings: Rs. 5,000 — Rs. 10,000 + the headache.
Look at the sum of the parts. The impact can be humongous.
If you have a home loan and invest in regular mutual funds, take out a day and tackle the above one at a time. You could end up saving a few lacs in 2020.
If you don’t have a home loan or invest in mutual funds, it’s worth taking out 30 mins. You could save 15,000–30,000 rupees.