Pakistan has been hit by worst inflation, unemployment and loss of purchasing power over the past few years. People have been seeing nightmare after nightmare as electricity and fuel prices soared, groceries became expensive, recreation and socializing went out of budget, while the salaries and business profits remained stagnant. With reducing purchasing power, it has become crucial for middle-class people to take better control of their finances and make adequate savings. Here are some best saving tips for you to follow in the face of a slowing economy of the country.
- Save at least 10 percent of your income every month
A classic rule of savings is that you spend after what you have saved, rather than saving after what you have spent. As a general practice, you must save at least 10 percent of your income, be it from salary, business, commissions, bonuses etc. and park it safely in savings. If you do not have dependents, this percentage should increase to at least 20 to 30 percent, as those with families see increasing expenditures over time. The savings can be parked in one of the saving accounts, mutual funds, stocks/shares, gold biscuits, silver bars, term deposits or any other mode you find convenient. Except for emergency funds, never keep your savings in cash, as cash loses value over time and may also be unnecessarily used in impulsive shopping, a practice you must forgo if you want to be a good saver.
- Earn protected consumer status in electricity and gas billing
Electricity distribution companies like K-Electric, HESCO, IESCO and LESCO have introduced discriminatory pricing in accordance with NEPRA rules. If your electricity or gas consumption remains under the defined protected limits, you will be billed less, otherwise, you will pay more with each new slab. Currently, electricity users with up to 200 units per month get an average bill of up to Rs3000 to Rs4000. While those with more than 200 units are slapped with at least Rs8000 bills, which increase as per consumption. Similarly, protected gas consumer pay up to Rs1000 per month, while unprotected pay more.
- Live near your work, work near your residence
Transport, commute, conveyance, travel….. all these represent major expense heads for individuals with limited income. While deciding on your job, you must take into account how much is to be spend on these heads. It is best to relocate near your place of work if you are a tenant. Alternative if you own a residence, you may consider getting work near your home.
- Go to Bachat Bazars for fruits and vegetables
Most cities in Pakistan have Bachat Bazars where you can find fruits and vegetables at reasonably low rates, If you are lucky to have one near your home, do take advantage of such markets, especially for vegetables and fruits. These markets offer products at prices which are reasonably lower than your next-door greengrocer.
- Buy monthly grocery from Imtiaz, Kifaya or similar wholesale markets
Most towns have a large super markets or superstores, where monthly grocery can be purchased at wholesale rates. They are a good way for savings even if you have to travel some distance to such markets. Imtiaz, Kifaya and other wholesale supermarkets offer the convenience to buy all general items, grains, confectionary, detergents and even medicines are fairly low prices. Save your money in monthly grocery by buying from one of their outlets.
- Buy gold and silver, no matter how small
It is best not to buy jewelry if you are looking to park your savings in gold and silver. Rather, you can buy coins, biscuits or bars made of gold or silver offered by ARY and other jewelers. Gold biscuits as little as 1 gram and silver as little as 1 tola can be bought from such outlets. Unlike jewelry in which up to 40 percent constitutes ‘making charges’, pure gold and silver can be encashed at their current market value.
- Buy a health insurance
Medical expenses and unforeseen emergencies can dry out all savings in a second. For these, it is better to invest in one of the health insurance plans offered by many companies. Some health insurance companies in Pakistan are also offering OPD or consultancy insurance. In case you have elderly dependents, this is a must-have.
- Invest your savings where they would grow over time
Many people have their savings in the form of ‘a bank balance’. Keeping your savings this way is akin to keeping a water cooler in sunlight – it will evaporate with time given the inflation. You could invest your savings in National Savings Schemes, Savings Accounts, Monthly Profit Accounts, or gold rather them keeping them in a current account. Most financial institutions are offering Islamic saving accounts as well, in which you could be sure that any profit you attain from savings is Shariah-compliant.
Most importantly, you must increase financial literacy and financial sense. Understanding basic concepts like time value of money, rent versus buy, insurance, saving schemes and investment products can help you grow your hard-earned money for use in later life.
