Top Reasons you should save money

Top Reasons you should save money

26 Nov 2018

We save basically because there is no way we can predict the future. Saving money can help you become financially secure and provide a safety net in case of an emergency. A few tips for saving money are as follows:

Keeping a track of your expenses: Keep a track of all your expenses methodically—that means every coffee, household item and cash tip. Once you have your data in place, organize the numbers category-wise, such as gas, groceries, mortgage, etc and total each amount. Consider using your credit card or bank statements to help you with this. Many mobile apps are providing this feature to help you keep a track of your expenses and also provide a detailed monthly analysis of your expenses.

Making a detailed budget plan: Your budget should outline how your expenses measure up to your income—so you can plan your spending and limit overspending. In addition to your monthly expenses, be sure to factor in expenses that occur regularly but not every month, such as car maintenance. You can compare your budget to those of people like you with the help of financial tools which are widely available.

Saving money with a proper plan: Now that you’ve made a budget, create a savings category within it. Try to save atleast 10 to 15 percent of your income. If your expenses are so high that you can’t save that much, it might be time to cut back on expenses, especially discretionary ones. To do so, identify non-essentials that you can spend less on, such as entertainment and dining out, and find ways to save on your fixed monthly expenses.

Saving for a goal: One of the best ways to save money is to set a goal. Start by thinking of what you might want to save for—perhaps you’re getting married, planning a vacation or saving for retirement. Then figure out how much money you’ll need and how long it might take you to save for it.

Decide on your priorities: After your expenses and income, your goals are likely to have the biggest impact on how you allocate your savings. Be sure to remember long-term goals—it’s important that planning for retirement doesn’t take a back seat to shorter-term needs. Learn how to prioritize your savings goals so you have a clear idea of where to start saving. For example, if you know you’re going to need to replace your car in the near future, you could start putting money away for one now.

Pick the right tools: If you’re saving for short-term goals, consider using fixed deposit accounts or a savings bank account. For long-term goals consider avenues, such as stocks or mutual funds, which are available through investment accounts with a broker-dealer. Remember that stocks are subject to market risks.

Make savings automatic : Almost all banks offer automated transfers between your different savings accounts. You can choose when, how much and where to transfer money or even split your direct deposit so that a portion of every paycheck goes directly into your savings account. Splitting your direct deposit and setting up automated transfers are simple ways to save money since you don’t have to think about it, and this generally reduces the temptation to spend the money instead.

Watch your savings grow: Review your budget and check your progress every month. Not only will this help you diligently stick to your personal savings plan, but will also help you identify and fix problems quickly. These simple ways to save may even inspire you to save more money every day and achieve your financial goals faster.

There could be several reasons to save money but these are enough for you to make a start. Saving money begins with your mindset. If you are relatively young, who has just started earning and around 25 years of age, then you should start saving money. You will find a lot of people in Indian families who save and invest their money for securing their future. You should save money for the following reasons:-

Your Own Money – It is nice to have your own money. So start saving as soon as possible and the money will gradually grow.

Emergency Fund – What if there is some kind of a financial emergency or a friend who needs a helping hand or there is a job loss? It is nice to have your own cash to deal with such contingencies.

Investments – Create a saving corpus first to initiate investing that you need. Then a portion of this can become capital of your investing corpus.

Asset Buying – If full payment is not possible for all asset purchases, you will surely require a down payment.

Education Expenses – You will be better off saving a big portion yourself even if you can borrow an amount for education. Saving reduces your re-payment burden at a later date.

Save for Luxuries – You should be sure that it costs a lot of money for all luxuries. You need to save money for that if you need to fund it yourself and that too without compromising on more important goals such as creating an emergency fund, building a retirement corpus, etc.

A Sinking Fund – Create a corpus to buy assets in the future – as a fresh one or as a new asset.

To conclude, we can say that having a comprehensive spending, saving, and investing plan in place helps you to preserve and grow your hard-earned money and transforms dreams from being mere wishes into actionable goals. A perfect financial plan can help you reach your goals which begins with a perfect savings plan.

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