7 ways to increase your Bank Balance without earning more
Vol 12 | Issue 51
Checking your account balance has to be one of the most stressful activities in our already taxing lives. Even with the most minimal of expectations, the number miraculously manages to underwhelm.
What is one to do? After all, your income is not always scalable – your boss seems to be strangely reluctant to give you a raise. Is there no way out?
|It is possible to increase your bank balance without earning more, says the author (Photos for representational purpose only)|
What you seek shall find you, a wise person once said. So today, I will present to you not one, but seven of the best ways to increase your bank balance without earning more:
1. Do the 30-day tracking challenge:
The blunt fact is that while most of us are intimately aware of every paisa we earn, the same cannot be said about our expenses.
But tracking your expenses can, apart from injecting the initial guilt at the astronomical figures spent, have very beneficial and unexpected side effects like – reducing your spending.
Ergo, more money in your bank account. Plus, with most of our payments being made online, an app can track it for you in the background, leaving a grand total of zero excuses not to do it.
2. Put most expenses on a credit card:
Imagine if someone, out of the goodness of their heart, were to give you some money and want it back only after two months.
You could use this free money to do whatever you wanted, spend it as you wish while your own money sat tight in your account and earned interest. Two months later, you paid them back.
What did you gain? Two months of interest. What have you lost? Nothing! Well, that is exactly what a credit card does, every single month.
While the amounts gained might be low, it is a low-hanging fruit with no effort required on your end.
3. Utilize tax-saving instruments:
If you use all the deductions usually available to salaried individuals, you can save tax on more than Rs.2,00,000/- every year. That translates to anywhere between an extra Rs.10,000/- to Rs.60,000/- in your pockets, no questions asked.
The only ask is that you invest some amounts in the schemes the government has picked out, and they so happen to be great ones.
|Credit cards can be used to pay for your expenses|
4. Diversify into equity:
Our parents’ generation has an irrational fear of the stock market, and an equally strong liking for Fixed Deposits (FDs) and Recurring Deposits (RDs).
However, we live in a high inflation economy, and by keeping away from equities, we are basically losing money – even if the amount in your bank stays the same, since you can no longer buy tomorrow what you are able to buy today for the same money.
Equities can be volatile – in the short term. In the long term, they are the biggest creators of wealth.
Over the last 20 years, the rate of return on investments in gold has been 8.4%, on fixed deposits 5.5%, on property 6.2%, and on equities 12.9%.
And this is in spite of the slaughtering of the equity market that happened during the 2008 crash. That’s a gain of more than 7% compounded every year on your balance simply by diversifying into stocks.
5. Rent instead of buying:
The math behind renting versus buying is pretty one-sided in favour of renting, except in very exceptional situations.
This is because renting a house and investing the difference in stocks will earn you much more than property appreciation could ever give you.
Given the rates of home loans and the returns in the stock market, the only way buying will make financial sense is if your property appreciates by at least 8% every single year for the next 20 years. Not impossible, but not too likely either.
Instead, rent, invest the difference, build up a corpus, and buy outright within a few years, instead of paying half your salary in EMI for most of your life.
6. Sell your car:
With the advent of remote working, commuting has almost become a thing of the past. If you aren’t one of the unlucky ones stuck going to the office every day, consider getting rid of your car.
I know, it was a middle-class-dream-come-true. But right now, it is just sitting in your parking space depreciating and requiring cleaning and maintenance.
|Consider using on-demand cab services or owning a pre-loved car|
Instead, on-demand cab services can help you if you travel infrequently to work. Maybe you can call it a chauffeured service if it makes you feel a bit better about the decision.
And even if you need a car, consider a pre-loved one. The value of a car drops sharply in the first couple of years of ownership. And after that, it pretty much plateaus.
So, there is a sweet spot that falls between the second and the third year of ownership, when a pre-owned car can give you exactly what a new car can, that too at a much-depreciated value.
7. Deposit that cash:
Most of us tend to keep sizeable amounts of cash on us or in our houses because it makes us feel safe. We rationalize it by saying that we have many cash expenses, the domestic worker’s salary, the laundryman’s tab, etc.
No matter that there are literally ten different 24/7 ATMs within a one-km radius of your house. No matter that most domestic workers now have their own bank accounts and you could pay them by a direct bank transfer in a few seconds without any cash actually exchanging hands.
By depositing the cash, you will only gain interest on the amount, with nothing to lose.
Easier said than done, I know. But these methods are still simpler than trying to extract a raise from your boss, aren’t they?
Priyanka Mashelkar is Dy. Commissioner of Income Tax and Author, 15 Sure-shot ways to Hit the Jackpot.
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