Have Rs 1-Lakh-Per-Month Salary? Here's How To Save Rs 1 Crore Quickly
The first step is to create a budget that outlines your monthly expenses
Hitting the Rs 1-crore mark might sound like a huge goal, but if you are earning Rs 1 lakh a month, you're already halfway there. With the right strategy and a bit of financial discipline, saving a crore isn't as impossible as it seems.
Here Are Some Simple Strategies
Create A Budget
The first step is to create a budget that outlines your monthly expenses. Break down your salary of Rs 1 lakh into essential categories:
Living Expenses: Rent, utilities, groceries and transportation.
Savings and Investments: The portion dedicated to wealth-building.
Others: Entertainment, dining and other non-essentials.
Aim to save at least 30% of your monthly income, which equals Rs 30,000. If you’re looking to reach Rs 1 crore quicker, try saving 40–50% of your income.
Invest Early And Regularly
Saving money in a bank account alone won’t get you to Rs 1 crore quickly. To grow your wealth faster, consider investing in high-growth options. Equity Mutual Funds may give you returns of 12–15% each year, depending on the market conditions and you can invest regularly through systematic investment plans.
If you're willing to take some risk, investing in stocks can offer high returns. For safer long-term growth, public provident fund gives you tax benefits and around 7–8% interest. The National Pension Scheme is another option that combines equity and debt investments with tax savings.
By investing around Rs 30,000 a month, you can take advantage of compound interest to grow your wealth.
Maximise Your Tax Savings
Reduce your taxable income to save more. Utilise tax-saving instruments like Equity-Linked Savings Schemes, PPF and NPS contributions and health insurance premiums and home loan interest deductions. This will free up more money to invest toward your Rs 1-crore goal.
Cut Down On Unnecessary Expenses
Take a look at your spending habits and find areas to cut back. You can reduce dining out, entertainment costs and avoid impulse purchases. Choose more affordable vacation options or limit them to once a year.
Build Emergency Fund
Before diving into heavy investments, set aside three to six months' worth of living expenses as an emergency fund. This will help you stay prepared for unexpected situations, like medical emergencies or job loss, without tapping into your long-term savings.
Track, Adjust Your Goals
Regularly monitor your progress to stay on track. Review your savings and investments every six months. If your investments are performing well, you might reach your goal earlier.
Focus On Increasing Your Income
To reach your Rs 1-crore goal faster, focus on boosting your income. You can ask for a salary raise or bonus, take on a side hustle or freelance work or upskill through certifications and training to increase your earning potential. Any extra income you earn can be directed straight towards your goal, helping you reach it quicker.
How Long Will It Take?
Let's say you save Rs 40,000 per month (40% of your salary) and invest it in a financial instrument offering a 12% return annually. Here's how compound interest would work:
Year 1: Rs 5.76 lakh.
Year 5: Rs 34.24 lakh.
Year 10: Rs 87.92 lakh.
Year 13: Rs 1 crore+.
With higher savings or better returns, you could reach Rs 1 crore even faster.
