# Secret trick to increase saving rate each month drastically

Who doesn’t like to save? When it comes to India, everyone try to save a portion of their income for future requirements. However, the saving rate may vary according to their income. But do you know that even if you are earning few thousand bucks, you can increase  saving rate each month by just following this secret but very simple trick.

Let me tell you this trick is more of psychological nature that sensitize you to think of saving money for future needs or emergencies. However, everyone cannot use this trick. People who are already saving on a regular basis can apply this trick.

I know you will be thinking that in the end, I will say to you to save automatic. But let me tell you this is not the case here. In order to increase saving rate each month, you need to do something else. So, let’s get started.

### Normal Pattern of Investing Money by People

1. People earn money
2. They make a budget for their monthly expenses.
3. After paying off all the expenses, they invest a part of money from the surplus

The most important thing to note here is that, people do not invest all of their surplus. However only part of the surplus is invested. Then what people do with the rest amount? Well, they keep it with themselves in order to use it in emergencies. This amount is known as margin of safety.

Let’s take an example to understand the concept clearly.

Just take out a paper and a pen. You can also perform the exercise on the excel sheet. The choice is all yours. Now write all your income sources in one column and all your expenses in another column. Add up the balance of both and find out the surplus. You will get the amount that is left after paying off all the expenses.

Now give a though, how much you invest from that amount before reading this article. Well, just a part of it. The rest you keep with yourself for those time when you need money suddenly.

Suppose your monthly income is Rs. 1,00,000 and your expenses are near about 65,000. The surplus amount left is Rs. 35,000. From this amount you only invest 15,000 to 20,000 The rest is kept as margin of safety which is utilized at times when money is needed suddenly.

But do you know there are few problems with this approach?

Income ………………………………………………………………………………. 1,00,000

Expenses……………………………………………………………………………… 65,000

Investment…………………………………………………………………………… 15,000

Margin of Safety…………………………………………………………………….. 20,000

This method of saving looks good but there are some very big issue with it. When you have invested a part of your saving, you become very happy that you have saved something. But you have left a margin of safety which increases your expenses and results in spending all of your margin of safety.

You know that you have a part of money is left. You will spend on meeting new demands that arises and it will automatically raise your expenses. You will start eating out frequently or will upgrade your phone. It is a universal fact that availability of supply increases demand.

### Here is the trick to increase saving rate each month

Instead of keeping margin of safety more than the investment made, keep it 10% of your income.

Income …………………………………………………………………………………….1,00,000

Expenses……………………………………………………………………………………65,000

Investment…………………………………………………………………………………30,000

Margin of Safety……………………………………………………………………………5,000

In addition to this, do not keep the margin of safety at your home. Instead invest the money from where you can access it in within 24 hours. In case you need higher amount of funds, you can withdraw them, as you have lot of money for yourself.

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