5 easy steps to fight rising prices

ArthaYantra | Updated On: September 27, 2013 15:53 (IST)

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New Delhi:  Although we have little control over rising prices, improving our saving habits can help us combat inflation. But, when it comes to savings, we are often riddled by questions like, how much to save or when is the right time to start saving. However, there is no need to get perplexed, simply analysing our current financial habits and past financial decisions can help us save those extra bucks.

Following these simple steps can help you fight inflation effectively:

1. Manage the non-committed expenses: The most important area where we can find enough avenues to save money is our non-committed expenses. Non-committed expenses are generated by our hobbies or impulsive buying habits. Though it seems easy in theory, behaviourally it is often difficult for us to overcome our instincts for instant gratification when it comes to non-committed expenses. Making a list before shopping, avoiding excessive usage of credit cards and giving a pause and thinking whether the purchase you're about to make is a need or a wish are few ways to control unnecessary expenses.
2. Manage the committed expenses: While managing non-committed expenses always stand out as a way to increase savings, we can often find ways to optimise our committed spending as well.  We can optimise the cost being incurred for our household expenses, utilities or existing loans. For example, we can look for deals on the best available packages from the DTH (Direct To Home) service provider, mobile service provider or even the internet service provider. Similarly, if the existing home loan is on the higher side, we can look for opportunities of refinancing to reduce the debt burden. Monitoring the electricity usage and carpooling can also often prove to be effective in making small savings.
3. Don't let your good money chase the bad money: All of us are entitled to make our share of financial mistakes, but the key is to identify and rectify those mistakes. The choices we made in the past often have a drastic impact on our current financial situation and savings rate. Be it a costly insurance policy or unproductive investments, identify those unproductive financial instruments. Take corrective actions to minimise these losses. In the case of costly insurance policies don't let the losses associated with the cancellation of these policies cloud your decision making. Look at the benefits of closing them and channelising them in better ways. It helps us in making logically prudent financial decisions.
4. Save before treating yourself: Increase in income is often associated with increased expenditure as opposed to increased savings. An increase in pay or yearly bonus will often prompt us to make some big ticket purchases we have been postponing for a long time. However, allotting a percentage of this increase or bonus towards savings can help us in augmenting our savings.
5. Track your expenses:The best way to improve our savings is to know where the money is being spent. Tracking the expenses following the above mentioned ways can prove to be an effective way to improve our savings.

ArthaYantra provides personal finance online.
Disclaimer: The opinions expressed in this article are the personal views of the author. NDTV Profit is not responsible for the accuracy, completeness, suitability, or validity of any information on this article.

Story first published on: September 27, 2013 15:10 (IST)