We all want to get the most out of our money, but most of us can’t afford to take large risks with our savings, and many have no savings at all, or are in the red. An estimated 40 million Russians are in debt, having borrowed 11 trillion rubles ($184 billion) in 2015 alone. Of those 40 million debtors, only about 8 million have the means to pay off their debts.

For those who don’t work in the financial sector, it can be difficult to know what the most efficient ways to manage our money are, and how to start getting a return on any savings. Are savings accounts the best way to increase a nest egg? Should we all be buying bitcoins? How can we all become more financially literate? Pavel Novikov, director of the Skolkovo Foundation’s fintech centre, shared his tips on smart investment and good financial hygiene during a talk at the Skolkovo Technopark this week.

Pavel Novikov, director of the Skolkovo Foundation's centre for financial technologies. Photo: Sk.ru.

1)      Stop using cash. Paying by card will help you keep track better of what you are spending per month and on what. With apps like Koshelok made by Skolkovo resident CardsMobile, you don’t even need to carry your bank card with you – you can upload all your bank, loyalty and transport cards to the app, and everything you need to pay will be in your smartphone.

2)      Find out whether you’re entitled to a tax refund. If you’ve bought a flat (including via a mortgage), or paid for education, medical treatment or medical insurance, or if you pay into a private pension fund or have opened an individual investment account, you’re entitled to reclaim some taxes. You can find out what you’re entitled to and submit a claim online via sites such as NDFLka.ru.

3)      Always remember that you can’t eat the pie and save it for later at the same time. If you want to accumulate savings, sometimes that means waiting a little longer to go on that dream holiday.

4)      If you’re looking to invest some savings, first check that you are in a position to do so. If you have outstanding debts, you should be clearing those as a priority, not investing. Do you have a reserve fund? Just as the country has a reserve fund designed to help it weather economic storms, individuals should have three to six months’ average expenses saved up for an unexpected job loss or medical expenses. If you don’t have that saved away for a rainy day, you shouldn’t be thinking about investing. Likewise, if you don’t have a personal financial plan or health and property insurance, rectify that situation before you start to invest.

5)      Savings accounts may seem like the natural place to start accumulating interest on your money, but they’re not the most effective method. Sure, they are low risk (deposits in Russian banks are guaranteed up to 1.4 million rubles [$24,000] by the law) but they are also low-return, as are bonds.

6)      If you know of a young and promising company, and have a thorough understanding of their industry and business model, you can invest in them to get a share of the profits later. One easy website that allows you to do this is StartTrack.ru, where many Skolkovo startups are among those seeking investment.

7)      Alternatively, you can invest in stocks and shares of established and successful companies, effectively buying a part of that company that entitles you to a share of its profits. This is high risk, but can be very profitable.

8)      A slightly safer option – and only a little less profitable – is investing in Exchange Traded Funds (ETFs) as part of a portfolio. By investing in ETFs, you’re investing in a group of companies or a whole industry, offering diversification.

9)      Open an individual investment account. These were introduced by Russian authorities in 2015 to stimulate private investors via tax benefits: you can choose either tax rebate for cash contributions to the account, or zero income tax on capital gain.  

10)   Ideally, have an investment portfolio that includes all of these things, from savings accounts in various currencies to long-term bonds and Eurobonds, stocks and shares priced in both rubles and dollars, and in cryptocurrencies. You can buy and sell the latter on sites such as Localbitcoins and Bittrex. And to continue improving your financial literacy, take one of the excellent courses available online, such as this one.