How to Save Money with a ₹20,000 Salary in India: 10+ Practical Tips

In India, most people earn less than Rs 20,000 a month, and in such a high inflationary environment, it becomes challenging to save money from your salary.

Saving is as important as meeting your current needs; it helps you prepare for your future goals and save for an emergency. Let’s find out how to save money with a Rs. 20,000 salary in India!  

Developing a habit of saving may be difficult for many salaried people, but in the long run, it can be very beneficial.

It not only helps you accumulate wealth, but also teaches you to budget your needs, and expenses, save on unnecessary expenses, and allows you to make the most of your hard-earned money. 

Whether you earn 20,000 or 2,00,000, investing and saving a percentage of this income is a habit thousands of millennials and Gen Z are picking up gradually.

Even with a small income, the Step-Up SIP Calculator helps you plan smarter

Can You Really Save with a ₹20,000 Salary?

Yes, you can but it takes planning and discipline.

Saving money with a ₹20,000 salary might feel impossible at first. After rent, groceries, and daily expenses, there’s often very little left. But even small savings can go a long way if you’re consistent.

The key is to start small and be regular. Even saving ₹500 or ₹1,000 a month can make a difference over time. It’s not about how much you save, but how regularly you do it.

You don’t need to cut all your expenses or stop enjoying life. Just track where your money goes, avoid unnecessary spending, and slowly build the habit of saving.

Many people in India manage to save from a similar income — and you can too, with the right approach.

Sample Budget Plan for a ₹20,000 Salary

Expense Category	Suggested Monthly Limit
Rent & Utilities	₹6,000–₹8,000
Food & Groceries	₹3,000–₹4,000
Transportation	₹1,500
Savings & SIPs	₹3,000–₹4,000
Entertainment	₹1,000
Miscellaneous	₹1,500

10 Ways to Save Money with a ₹20,000 Salary

1. Make a monthly budget before each paycheck

Making a monthly budget will help you keep track of where your money is going and control your expenses. Making a monthly budget will help you to categorize your monthly spending.

This will help you to avoid overspending, and you will be able to save some money from your monthly salary.

2. Try to clear debt with high interest rates

If you have taken any loans, then try to pay off debts with the highest interest rates first. If you have not taken any loans, then try to avoid taking any fresh loans.

For instance, a personal loan attracts huge interest. One should always avoid taking it into consideration.

3. Cutting down on monthly expenses

You can cut down your monthly expenses in many ways, like lowering the expenses, credit card spending, electricity, mobile recharges, entertainment expenses, avoiding outside food, prudent grocery shopping, transportation, etc.

By saving a few bucks from each category, you can actually save a lot of money.

4. Start investing your savings

Just saving money will not help in any way until you invest it in the right asset class. If you are just saving and not investing, then your money is losing its value with time.

So, investing becomes the most important part of your savings. In investing, the most critical factor is time. You need to start investing as soon as possible.

You can also start your saving and investing journey with just Rs 500. The idea is to start early, even with a small amount of money.

5. Cancel unused subscription

You might have taken subscriptions from different websites like Netflix, Amazon Prime, etc., but you are not using those monthly.

So, you can cancel all your unused subscriptions and save a couple of bucks every month.

Also read: How to save 50 lakhs for a child’s bachelor’s in New Zealand?

6. Avoid late fees

Avoid late fees on loans. Avoiding late fees can help plan your expenses and become systematic, and you can save money. A late fee is an extra expense that might not be planned or part of your budget.

7. Prudent grocery shopping

Grocery is a must for every household and is important. One can save money in grocery buying in different ways like one can go for bulk shopping so that it will reduce the per unit cost.

Another way could be to get a shopping card which allows a discount on monthly grocery shopping.

8. Shop during sales

Shopping during times of sales will definitely be going to help you save money. During sales like Diwali or summer, you can find heavy discounts on clothing and other accessories.

9. Avoid impulsive buying

Impulsive buying means an unplanned decision by a consumer to buy a product or a service. So, one needs to avoid impulsive buying, and if you make an unplanned decision, this will increase your unnecessary expenses.

And you will end up buying things which are not important.

10. Pay yourself first

Remember to pay yourself first. Do not compromise on your health; upgrade your skills, and reward yourself first. Always remember your health is wealth.

Managing finances on a ₹20,000 salary can be challenging, especially when planning for significant expenses like a child’s education. However, with strategic saving and investment methods, parents can effectively allocate their resources to secure their child’s future.

Here’s how EduFund can assist in this journey

1.Create a Budget

• Track Expenses: Start by tracking monthly expenses to understand where your money goes. Allocate specific amounts for essentials, savings, and discretionary spending.
• Prioritize Savings: Set aside a portion of your salary for savings before spending on non-essentials. Aim for at least 20% of your income if possible.

2.Utilize Systematic Investment Plans (SIPs)

• Invest Regularly: With a limited income, SIPs allow you to invest small amounts regularly in mutual funds. This approach not only helps in wealth accumulation but also benefits from rupee cost averaging.
• EduFund Support: EduFund offers tailored SIP options specifically designed for children’s education, enabling parents to invest consistently towards their educational goals.

3.Consider Public Provident Fund (PPF)

• Long-Term Savings: PPF is a government-backed savings scheme that offers attractive interest rates and tax benefits. It requires a minimum investment and has a lock-in period of 15 years, making it suitable for long-term goals like education.
• EduFund Guidance: EduFund can help parents understand how to incorporate PPF into their savings strategy while balancing other investments.

4.Explore Fixed Deposits (FDs)

• Safe Investment: FDs provide guaranteed returns and are ideal for short-term savings goals. While the returns may be lower compared to equities or mutual funds, they offer security for your capital.
• EduFund’s Insights: EduFund provides insights into the best FD options available, helping parents choose the right bank and tenure based on their financial goals.

5. Emergency Fund

• Financial Safety Net: Maintain an emergency fund to cover unexpected expenses without derailing your education savings plan. Aim for at least three to six months’ worth of living expenses.
• EduFund’s Tools: EduFund emphasizes the importance of an emergency fund and offers tools to help families calculate how much they should save.

Conclusion

By following the above-mentioned steps, you can start saving early and develop an investment plan. Don’t wait for your salary to increase to start saving, even if your salary is low, you can start as small as Rs. 500 every month and watch how this small amount grows.

Budgeting and saving small sums of money can make a huge change in your savings habit, meeting future expenses, etc. 

Just ensure that you analyze the benefits of your spending. Make short-term goals to help you save money. If you save today, then you will be able to tackle any kind of emergency in the future.

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