College days are obviously the best part of your life. You get to know the world like never before, tasting the first lessons in freedom and a whole lot of other things. It is also the time when you could be incredibly irresponsible, but don’t worry, after all it is all part of the experience, right?

The key to partying and socializing in college narrows down to one thing and that is money. Anyway at this point its worthwhile to remember what that ad says, “There are some things that money can’t buy, but for everything else there is…(You know what)“.

Methods to Save Money if You are in College

Now being in college need not stop you from saving money. On the contrary, you get to save a lot during those times. Here are some easy ways to save money without sacrificing on your fun.

8. Be Your Own Finance Minister; Make a Budget: The first thing you need to do when you start to save, is to make a workable budget. It may sound ridiculous at first, but it is actually fun. There should be a long-term budget and short monthly budgets.

Long-term budget means to calculate the rough estimate of your expenditure for your whole tenure at the college. See how much money you can spend for that time. This is just a rough estimate and is used to give you a sense of how much you can spend. This helps you to plan your monthly expenditures. If you are rich enough the budget could go up. If you are going to college on a student’s loan and then you will automatically reduce the long-term budget.

Short-term budgets are detailed and usually done at the beginning of each month. This is where you must actually be saving money. Divide your expenditures into groups like food, rent, transportation, entertainment etc. and allocate money to each group. Then strictly live according to the allocation. You can allocate more money to entertainment also, but you must be able to make up for it in the next month. This way you could keep your long-term budget in check and can have real fun, when you decide to party.

7. Beware of Small Expenditures: You may not see them or feel them, but they are always around you sucking away at your income. Be careful of these tiny expenditures, which will eat into your pocket. They are hard to detect because they are small and sometimes very usual. You might not remember quickly how many times you went to a tea stall for a cup of tea. Expenditures like these are a drag on your pocket money.

If you are more aware about your spending, then you can prevent overspending on items like these. In addition, there are small expenditures for some like smoking, using paan and drinking. For those who are able to quit these habits can see how much they could save at the end of the month. Moreover, quitting the habit could also save astronomical amounts in medical bills.

6. Change Your Lifestyle: Actually, using a bicycle or using public transport is cool, never mind the amount you can save in this way. It is also a service to humanity. Going eco-friendly has the added advantage of improving your health. Use your bicycle to go to college and you will be in better shape than your friends in no time.

Choose pastimes that are different and not too costly. You can pick up a hobby or go for some societal work. Having no alternate activities makes you want to spend time with your friends at the mall or go to expensive restaurants etc. thus spending more. You need not shun these things altogether, but you can put in a check by doing something that gives you more peace at heart. Just substitutes those expensive things that gives you fun with more productive and useful activities that gives you pleasure.

5. Eat Healthy: This follows from the above. Eating healthy, homemade food is part of changing your lifestyle. You need not spend huge amounts of money to eat healthy foods. On the contrary, more money is spend eating junk food than healthy ones. How ironic is it? You spend more money so that you can eat foods that are bad for your health.

Eating healthy also means saving money. If you are staying at home, help your mother in the kitchen and learn exactly how she prepares those delicious foods that no up-town restaurants are going to cook for you. This could also help you out in future when you are away from home. For those who are living with friends, there is no better fun than cooking tasteless food with your friends.

4. Avoid Credit Cards Like the Plague: Now, you need to get this into your head: You Don’t Need Credit Cards to Live Your Life. See most youngsters are so much addicted to this card that it practically rules their life. Maybe it is the false sense of security you feel thinking you can buy almost everything if you a credit card. But remember, before long  you will be in deep trouble with a neck load of debts that you cannot repay. Why do you need to lose your reputation, when you can live with dignity without any debts?

3. Learn The Way of the Buddha: Well, you could add a sense of spirituality to your saving regime. So learn the way of Buddha, which is the ‘Middle Path‘. The crux of the teaching is simple; don’t do the extremes dear. Don’t overspend and don’t be a miser either. Learn to go through the middle path. God gave you the power to think or otherwise you won’t be reading this. With complex thoughts it is also possible that you know what is good and what is bad for you.

So, to practice the way of Buddha you must use your head and be wise enough in your spending ways. Only a person who can enjoy the world and also bear the hardships of renunciation could really say that he is living in the right sense.

2. Investing is the Best Saving: As the saying goes,” Attack is the best defense”. This could be applied to your college saving technique too. Invest your money in income generating sources that gives you moderate returns. It is better to avoid risky investments because you are in college and not earning.

When you are investing the money, you are actually saving the amount, which would otherwise have been spent. The moderate income that you invest will give you an incentive to keep investing and make more money. So if you want to save, invest your money each month.

1. Do Part-time Jobs: There is nothing better than working and making your own money. This helps you in saving too. With added income you could also invest it and make more money. You could plan your investments such a way that you will only need money from that investments and not from your parents.

In addition, having jobs in colleges will prepares you a lot in future when you get into the real world. You will get a feel of real life that encourages you to perform better.

These are simple and basic rules on how to save when you are in college. In addition to saving money, learning to save will also help you to discipline your self. So start saving without losing any of the fun of college life.

Related posts:

1. Four Easy Ways to Save Your Hard Earned Money from the Taxman
2. Six Well-Known Ways to Invest 1 Lakh Rupees to Save Tax
3. 9 Tips to Save Money on Low Income

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You might have seen the euphoria or gloom on the faces of stock market traders, when the government announces the new rates. But, you must understand that these are not terms which affects the traders in stock market alone. They will affect you also if you have a bank account or are planning to take a loan. These terms are interconnected and it is not difficult to understand.

Credit Reserve Ratio (CRR)

The Reserve Bank of India has stipulated that every scheduled bank, be it regional or co-operative or whatever, must keep a percentage of the amount of their total deposits with the RBI as liquid money. The percentage of the amount that should be kept with the central bank is called Credit Reserve Ratio. The bank can only lend the rest amount of the deposits to customers as loan.

Consider that a bank’s total deposit amount is Rs. 100 crore. If RBI says that the CRR is 6%, then that bank must keep Rs. 6 crore with the RBI has liquid money. Now, the bank can give only 94% of their total deposits as loans to customers.

So why does RBI do this? First, RBI needs to have a control over every scheduled banks in the country, so as to maintain the economy. An economy with no financial regulators is bound to fail. By using CRR, the RBI can control how much money each bank can lend to its customers.

During inflation, when money supply is too much in the economy, the RBI raises the CRR. Therefore, every bank has to keep a larger amount of money with the RBI. This reduces the amount of money that they can lend to their customers. This reduces the money in the hands of the people thus containing inflation from spreading.

During recessionary periods, RBI lowers the CRR leading to more money in the hands of the banks to give for lending and thus more money into the economy to jump-start it from sliding into a depression.

Repo Rate

When banks are in short of liquid money, they borrow money from the RBI (this is precisely why a central bank is called the banker’s bank). RBI charge interest on these loans to the banks. This interest rate is called Repo rate. When Repo rate is reduced, banks find it easy to borrow money from RBI and thus more money is pumped into the economy through this method.

When Repo rates are increased, the borrowing rate is expensive thus dissuading banks from taking loans from the RBI. This reflects into the economy with less amount of money given for lending and higher interest rates.

Repo rates is another tool employed by the RBI to maintain the flow of money in the system.

Reverse Repo Rate

Don’t think that this borrowing is a one way affair. Sometimes, RBI borrows money from banks. This is something these banks cherish because RBI gives returns for the money they have borrowed.

Banks naturally channel their funds to RBI because of high interest that they would get on the deposits. Besides, this lending is the most safe bet available, because you are lending to RBI, the Bank that produces money, and not to some business man with a history of default.

For RBI, this is yet another simple tool in their kitty to control money. After all, when funds are channeled to the RBI there would be not much to lend it to the bank’s customers. This way the RBI can control money flow during inflationary periods.

No related posts.

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Fortunately, all that has changed now. As they say, time and tide waits for none. Our banking system cannot remain in the dark ages for long. RBI introduced new systems such as National Electronic Transfer System (NEFT) and Real Time Gross Settlement (RTGS) that has made money transfer quick and efficient.

What is NEFT?

NEFT was started by RBI to help transfer money across India without any delay. This system is based on Deferred Net Settlement. The transactions are settled in one-hourly batches beginning from 9am to 7pm. On Saturdays the transaction settlements is between 9am and 1pm.

With NEFT, you can transfer any amount of money to any bank in India. One benefit of this is that if you want to transfer money it is not necessary to have a bank account with the bank. The only requisite of NEFT is that the bank that you are sending money from and the beneficiary bank must be part of the NEFT system.

The charges for this facility are very small. It costs you only Rs.5 plus service tax for amounts up to Rs. 1 lakh and for amounts more than that it will cost you only about Rs. 15 plus service tax.

However, you might have doubts about the safety of transferring huge amount of money through this system. Anyway, one thing is for sure, NEFT is safer than most of the other types of transfer that we use today to transfer funds faster across India. Being faster need not mean that it must be somehow riskier.

Things to Check before Transferring Money through NEFT

As mentioned earlier the transfer of money is safe considering RBI introduced this system. Nevertheless, you must check two things before initiating a transfer.

Check if both Banks Use NEFT: Out of the 82,400 bank branches of 101 banks in India, only 74,680 branches are NEFT-enabled (as in January 2011). Efforts are only going on to make the entire bank branches come under this scheme. Therefore, make sure that both banks, the one you are sending money from and the beneficiary bank comes under this scheme.

Check if You Written the Correct IFSC Code: IFSC code is an alphanumeric code that helps the system identify the bank branches involved in NEFT. There is a code for every bank branch in the country. When entering the code make sure, it is correct or otherwise it will lead to complications in the fund transfer. In addition, check if other details like your name, your address and the beneficiary’s name and account numbers are entered correctly.

There are also options to track your transfer, and if your money has not reached the beneficiary, you can complain with NEFT Customer Facilitation Centre or you can inform the National Clearing Cell, RBI, in Mumbai.

The use of NEFT for transferring money is a huge change from the earlier times. It can be used by individuals and corporate alike for their personal and business needs. With Net Banking facilities provided by most of the banks, you can now initiate a money transfer by using NEFT facilities while sitting at your home or office.

This method is making money transfer cost effective, it saves on time and is quite simple. NEFT is sure changing the way we transfer money.

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Your banks just won’t encourage you to prepay your loan even if you have the means to do it. So, if you are planning to close your loan by prepaying, just think over it twice because what await you will be prepayment fines and loads of paper works. Hey, your life just got worse.

So, why does your bank dislike prepayment? This is because if you prepay your loan, their income flow is blocked. If your loan was for ten years, imagine the income that they would lose if you prepay the amount after five years. Your bank will also lose on five years of interest.

Things You Need to Know about Prepayment

If you are planning to prepay your loan, here are the things that you should be aware before doing so.

Prepayment Charges: Actually the bank imposes a penalty if you want to prepay the loan. It might be 0.5% to 2% of the remaining unpaid loan amount. If you try to close the loan early on, then the percentage of loan outstanding will be huge and you would incur a loss by prepayment.

Interest Rate: Mostly interest rate is the main factor for considering prepayments. If the interest is higher then we must be paying that amount for the loan. It would seem profitable to pay of the loans when interest rate is considerably lower. However, your decision must not depend solely on the interest rate. It must be based on the prepayment charges, the loan tenure and the amount outstanding.

The major part of EMIs for the first years is used to pay the interest on the loan. Towards the latter period we start paying the principal amount. Our saving comes if we can avoid paying the interest. Therefore if we prepay towards the end we would be paying the principal that we must pay anyway. Besides, the banks charge a penalty which adds to the loss.

Tax Benefits: These housing loans have a tax benefit. If you prepay the whole amount much earlier, you cannot enjoy the tax benefits that come under Section 80C. Therefore, before prepaying take this in to account and see if prepaying your loan is beneficial than the tax benefits you get from it.

Ownership: The major advantage of prepaying your housing loan is that you get possession of the house. You get to be the owner a bit earlier. More than a prestige issue, this helps you to re-sell it or take further loan for any immediate expenditure etc.

Prepay Partly: You can prepay in lump sum or you can pre pay partly. One advantage of prepayment through parts is that every prepayment goes into paying your principal amount. Once this principal is reduced the amount you need to pay as interest also goes down.

Before deciding to prepay your loan just weigh all your options. See if you are actually losing by it. Do not take just one factor while deciding to prepay. Consider the costs involved from all possible sides then take your decision. If you are planning to take a house loan make sure you take it from a bank that do not have prepayment charges or a bank that doesn’t over penalize you for prepayment of your loan.

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1. Credit Card Woes; Why Gold Loan is Better than Personal Loan for Repayment?
2. Small Banks Woo Major Banks’ Customers with Interest Hike on Savings
3. The 5 Things You Should Know Before Availing a Gold Loan

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However, there are some things you need to know before running head over heals to the nearest bank, to take a gold loan.

1. Interest Rates

The first thing that comes to our mind when going for a loan is the interest rate charged. Does a Gold loan provide better interest rate than personal loans? And if they do, from where should we take it; banks or NBFCs?

The answer is that gold loans charge less interest rate than personal loans and it is better to take it from a bank because NBFCs charge higher rates. While banks charge around 12% to 15% for gold loans, NBFCs charges are usually high. It may vary from 12% to 22%. Some times it may rise to about 33%.

If the purity of gold is high then interest rates are lowered. Besides, if you pledge a high amount of gold with respect to the loan taken then they will charge you less interest.

2. Credibility of Banks

If you are dealing with NBFCs and other smaller players in gold loan, you should be very cautious. You must check if these institutes are genuine or not. Make a background study about the NBFC and see if these institutes have come under any allegations or investigations.

Do not believe what they say in their ads. They could say they are the best in the world even if it has only one office and that too located in your vicinity. Check if they have a considerable asset back up and track their performance over the years.

3. Loan Amount is Lower than Gold Amount

One major defect of gold loans is that we do not get the full amount for the gold we have pledged. Most NBFCs and banks provide 70% to 85% of the gold amount as loan. However if the loan amount is 50% or less then we can negotiate on the interest rates charged. It will be favorable to us.

4. Repayment and Default

Loan tenures differ among different banks and NBFCs. Sometimes it is for 12 months and at other times it is for one month. Certain banks like SBI stipulate that a small amount of principal must be paid along the interest. NBFCs usually expect interest to be paid every month and in the end the principal is paid to retrieve the gold.

If you have ever defaulted on a bank or NBFC, don’t go there to pledge your gold. They could appropriate that gold for the earlier payment you are supposed to make.

5. How Gold Prices are Calculated

There are many ways in which banks and NBFCs calculate the price of gold you pledge. Some NBFCs and banks have a fixed price and revises it every 6 or 12 months. Others take the last two weeks’ price and average it to get at the price of gold. Many other companies just take the international rate on that particular day. These companies provide loan on how they calculate the price of gold. So it is important that you learn which is profitable to you.

Gold loans are more suitable in most ways, especially when you need a small amount of money. Gold loans have no or very little processing fees and it doesn’t take more than one day to get your loan. The lender usually does not check if the borrower is credit worthy and the procedures are also very simple.

Related posts:

1. Credit Card Woes; Why Gold Loan is Better than Personal Loan for Repayment?
2. In Need of Money? There are Better Options than Personal Loan and Credit Cards
3. Five Things You Never Knew about Fixed Deposits

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