Business Strategy with Hirav Shah Most people end up with little or nothing to save because spending always feels urgent, while saving feels optional
Introduction: A Game-Changing Shift in Financial Thinking
For years, we’ve been taught the conventional formula: Income – Expenses = Savings. This mindset prioritizes spending over saving, leaving many of us wondering where all our money went at the end of the month. But what if we flipped this outdated formula?
Introducing the new financial formula:
Income – Saving = Expenses.
This simple yet powerful shift forces you to prioritize savings before spending, ensuring that you’re building wealth rather than just scraping by. Let’s dive into how this formula works and why it can transform your financial life.
1. The Problem with the Old Formula
The traditional formula—Income – Expenses = Savings—sounds logical, but it’s flawed. It makes saving an afterthought, dependent on what’s left over after you’ve spent on bills, shopping, entertainment, and more.
Most people end up with little or nothing to save because spending always feels urgent, while saving feels optional. This approach leaves no room for unexpected expenses or long-term wealth building.
Hirav Shah reflects: “The problem isn’t earning too little; it’s prioritizing spending over saving. Flip the formula, and you’ll flip your results.”
2. The New Formula: Income – Saving = Expenses
- Set Aside Savings First: Decide how much you want to save (e.g., 20% of your income).
- Use the Remaining Income for Expenses: Adjust your spending to fit within what’s left after savings.
- Forces you to live within your means.
- Prioritizes financial goals over impulse purchases.
- Builds discipline and long-term wealth.
3. Benefits of the New Formula
1. Builds a Savings Habit Automatically
When savings are non-negotiable, they become a habit. Over time, this habit compounds into significant financial security.
2. Reduces Lifestyle Inflation
When you save first, you’re less likely to let expenses creep up as your income grows.
With consistent savings, you’re better equipped to handle unexpected costs without going into debt.
4. Boosts Financial Confidence
Knowing you’re saving regularly gives you peace of mind and control over your finances.
4. How to Implement the Formula in Your Life
Step 1: Determine Your Savings Goal
- Aim to save at least 20% of your income. Start smaller if necessary and build up over time.
- Set up automatic transfers to a savings account right after payday. This ensures saving happens before you can spend.
Step 3: Track and Adjust Expenses
- Use budgeting tools or apps to monitor spending and make sure it aligns with what’s left after saving.
Step 4: Reduce Unnecessary Expenses
- Identify areas where you can cut back, such as subscriptions, dining out, or impulse purchases.
Example:
Imagine you earn 5,000 per month and decide to save 20% (1,000).
- Savings: 1,000 (automatic transfer to savings).
- Expenses: 4,000 (allocated for rent, groceries, utilities, and discretionary spending).
This approach ensures your savings grow consistently.
5. Common Challenges and How to Overcome Them
Challenge 1: Struggling to Cover Expenses
- Solution: Start small. Even saving 5% of your income builds the habit. Gradually increase the percentage as you adjust.
- Solution: Create an emergency fund as part of your savings to handle unforeseen expenses without derailing your plan.
- Solution: Use cash for discretionary spending or set strict limits on credit card use.
Hirav Shah advises: “The key to overcoming challenges is consistency. Even small, regular savings can lead to big results over time.”
Conclusion: Start Saving Smarter Today
Transforming your financial habits starts with flipping the formula. By making Income – Saving = Expenses your guiding principle, you’ll prioritize what truly matters: building a secure and prosperous future.
Take Action Today: Decide how much you’ll save, automate the process, and adjust your spending accordingly. Your financial freedom is just one smart formula away.
Hirav Shah concludes: “The secret to wealth isn’t about earning more; it’s about saving smarter. Flip the formula, and you’ll flip your future.”
The writer is a well-known Business Turnaround Specialist, Astro-Strategist, and Best-Selling Author
Email: [email protected]
