“Don’t Save What is Left After Spending; Spend What is Left After Saving”~ Warren Buffet.
Saving money has always been an aim that is so close and yet so far. While many believe that it involves huge changes in one’s lifestyle, it is, in fact, the small tweaks and planning that makes all the difference.
By creating a monthly budget or charting out a 3-month saving challenge, you will be able to squirrel away a substantial amount that will contribute to a healthy savings habit.
Why should you go through all this effort? Though there are different reasons behind saving money, here are the top nine reasons that should be prioritised over others.
Save for Education:
To give you a scenario, the fee of the class of 2018 at a premier business school in India is INR 19.5 lakhs for a two-year course. Saving for education negates many financial liabilities like heavy education loans and the best way to proceed is to start early. In order to have a corpus for your child’s higher education, you can invest in child education plans offered by several financial institutions that can offer high capital gain. However, the entire planning process boils down to assessing the value of the goal and time at hand.
Save for Retirement:
Though many depend on the pension scheme or the lump sum payment, the future is always going to be uncertain. Unforeseeable circumstances like sickness, monetary emergencies, inflation and many others make it imperative for people to save for their retirement and avoid running out of money. In addition to plans like SIP, recurring deposits, you can also leverage the power of tax devoid compounding via a retirement plan. In this case, you can see your money grow because the invested money, which could have been taxed, will now be reinvested.
Save for Holidays:
Everybody deserves a break occasionally to go on a holiday. However, this holiday can affect your finances if not planned properly. There are many facets to holidays like travelling, accommodation, shopping, travel insurance and miscellaneous expenses, and each element requires considerable money. It is, therefore, important to save up before embarking on a trip. You can start by making a budget and then opening a holiday bank account, which will hold all the financial assets pertaining to your trip.
Save for House:
Investment in property like a house is undoubtedly great investment. This makes saving up essential, which involves the cost for interiors and other miscellaneous expenses that might drain your financial assets. You can start saving for your dream home by opening a dedicated savings account or investing in a home plan offered by several financial institutions.
Save for Emergencies:
Emergencies come unannounced and can run your capital dry if not planned. Health emergencies, legal issues and many others are such situations that you can be prepared for by investing in health plans, emergency funds, and monthly deposits in savings accounts to name a few. Several financial institutions help plan out contingency plans for such emergencies.
Save for Known Expenditures:
Maybe you will be shifting to a new house in 5 years down the line. The entire process of uprooting yourself from your current location, and shifting to the new house, upping its interiors, investing in its repair and maintenance, everything will come with a price tag. You must be aware of such expenditures and save up for them separately so that it will not make a dent in your cumulative savings. Have a separate account for this expenditure and invest in a regular monthly amount to raise the capital you need for the D-Day.
Save for Rainy Days:
Rainy days can comprise of many scenarios like loss of job, recession and others where your source of money abruptly ends. While many might confuse it with emergency funds, these two elements are not the same. An emergency fund can comprise a portion of the money that can resolve a short-term issue while saving for rainy days might equate to a year worth of savings that can help you and your family tide through a financial lull or crunch.
Save for Financial Freedom:
Who does not like options? Financial freedom should be the ultimate aim of any working professional. Having one provides the person with the flexibility to pursue their choices - be it changing careers, quitting and travelling, or stay at home. Long term investment plans play a key role in strategizing these savings and grant you the financial freedom that you deserve.
Save for Peace of Mind:
Financial crunch affects the emotional balance of a person, which in turn, erodes his/her physical well-being as well. Therefore, saving up is very important to maintain peace of mind. You can attain this security by investing in long term savings plans, equity investments, insurances, recurring deposits, fixed deposits and other options that will help you accumulate a certain amount.
Saving money is a habit that, if enforced early, can smoothen many paths and ensure financial stability, which is very important in today’s economic fluctuations. Planning early and realistically is the key to an effective saving habit.