‘If you cannot save money, the seeds of greatness are not in you.’
– W. Clement Stone
What is saving?
‘Pay yourself first’
Paying yourself is another term used for saving. It basically implies keeping some portion of earnings to you.
Saving is sparing some of your pay for various objectives. I think about sparing not the same as controlling costs. The primary aim of a saving plan should be sparing some cash to accomplish a certain objective.
A good finance plan will include saving strategies and parking spots for saved funds. Parking your funds at right spot is a significant aspect.
What are the types of savings?
‘Save first spend later’
Fixed saving is the amount you keep aside from your salary. This should be done before you start spending your cash. The fixed saving amount should be kept aside as soon as you get the salary and left untouched.
The ideal saving should not be less than 10% of your earnings. . The fixed savings should not be affected by your expenses.
Ex. Let’s say Sumesh has salary of Rs.20,000 then he should save at least Rs. 2000 before he start spending his cash.
Fix savings are useful for accomplishing long term goals. This method is usually planned for longer term objectives like higher education, marriage, buying a home.
The amount to save should be decided in such way that it should not affect your daily lifestyle and needs. The key to get successful is to be consistent for a longer period of time. Hence it is important to decide the amount you are going to keep aside.
Once you acquire a considerable amount you can think of investing and parking it at a spot where it should grow. You can hit your long term targets with ease by implementing this strategy.
‘A penny saved is a penny earned’
– Benjamin Franklin
As the name suggests these savings are not fixed and relies on the circumstance at the front.
The flexible savings may vary month by month as these funds depend upon various random factors. The amount of saving may fall due to Inflation, emergencies,etc or rise due to unexpected wins, capital gains etc.
You can increase flexible savings by controlling costs.
Ex. Sumesh quit using his vehicle to go to office and began traveling by public transport. He needs Rs. 3000 if drive via his own vehicle, the cost shrank to just 500. He spared 2500 for the first month. The second month because of climate conditions he was force to use vehicle 10 days out of 30 so he had the option to spare only 1000.
Variable saving is the surplus after satisfying entire needs and wants. The flexible saving fund should be calculated at the end of the month.
It is really fun to review budgets, make financial plans, finding and arranging different approaches to set cash aside simultaneously moving ahead with your daily life.
Why saving is important?
‘Money speaks only one language if you save me today I will save you tomorrow.’
To battle emergency situations:
Life is unpredictable.
You may have to confront an unfortunate situation at any time. You may need a substantial fund to fight with the contingencies. Savings will prove exceptionally useful in such a critical scenario. The savings will come to your aid in medical emergencies, repairs of home appliances, battle occasional inflation in groceries, etc.
Remember your savings are going to be the first savior when financial crisis shows up.
To accomplish goals:
Savings makes it easy to make big purchases. It will help you organize life events like birthdays, marriage, celebrate promotion hence adding delight to life. You can plan to buy something by sparing some money in your budget.
Creating wealth :
If you want make fortune there is no other easiest way to get there. You can invest your savings and grow your savings. History has witnessed small investments leading to colossal treasures.
Saving money is the key to financial freedom:
If you want to stop getting bothered by your poor finances start saving. Financial freedom requires sound financial management and savings is one of the major aspects of personal financial planning.
Savings will help you avoid debts and borrowings. Avoiding debts will save you from paying interests. It helps you to stay away from mental stress and burden to repay.
You can catch opportunities like the discounted purchase of clothes, used car, bulk grocery purchases at low cost. If you have a good amount of savings you can buy a plot or flat at a prime location in a recession period.
To create a legacy:
It’s our duty to make heritage for upcoming generations. Your savings will leave a financial legacy for your youngsters.
You are savings will help you secure the future of your kids. Wouldn’t you say we must guarantee the most splendid future for our next children?
What are the benefits of saving?
‘The habit of saving is itself an education; it fosters every virtue, self-denial, cultivates the sense of order, trains to forethought and so broadens the mind.’ -T T Munger
Feeling of security
You can rely on your savings for small emergencies. You and your loved ones feel secure as you have reserve funds to battle with financial problems.
- Peace of mind
Don’t you think you will be more relaxed if you have a decent balance in your bank account?
Consistent saving is the key to make riches. It disciplines you in many directions. Savings awakens your creativity, teaches self-denial, teaches value for money, and makes you disciplined.
Passive income sources
You can create multiple sources of income by investing your savings. There are numerous small businesses you can run along with your regular job.
Savings gives you confidence in decision making as you have savings as a provision to cope up with any tragedy. It is less bothersome to take decisions with your funds if you have a good bank balance.
What are the objectives of saving funds?
Objectives give you the reason for which you are saving all the money. An objective inspires and propels you through any obstacle and makes you save consistently.
Ex. Keeping Rs.2000 aside with the goal that you can purchase a clothes washer toward the year’s end.
It isn’t compulsory to have a goal; you can start saving cash without any objective. You can save just for fun. Your saved fund will surely come to your aid at emergencies or when opportunity knocks your door.
Saving is fun
Remember the fun we had in our childhood while counting the coins after breaking our piggy bank. It is truly amusing to keep dropping coins in a piggy bank and getting a surprised lump sum to buy video games.
Start saving and you will realize that saving cash is a real fun than spending it. It stir the creator within you while making budgets and configuring ways to control expenses.
How can we keep our money?
‘The art is not in making money but in keeping it.’
- Create a monthly budget to plan and track your finances.
- Eliminate your debts as early as possible.
- Setting saving goals can motivate you to stay centered.
- Find alternatives for needs.
- Save on utilities like electricity, LPG, fuel, water, etc.
- Make use of piggybank to save coins.
- Avoid taking EMI’s for purchases as they include interests and application Processing fees.
- Check the goods offline and online before purchase.
- Stop acting like rich and live agreeing your salary.
- Cook at home to save money as well as stay healthy.
- Buy in cash to get discounted prices in retail shops.
- Use digital payment methods to get cash backs and offers.
- Living a healthy lifestyle is going to save thousands of bucks.
- Try to get a hundred percent appreciations for the money you spend.
- Learn to negotiate and bargain a deal.
- Control expenses by distinguishing between needs and wants.
- Check salary slip.
A little caution
You should not try to save more than needed. If you stretch it too longer you are going to make your life boring and joyless.
There is nothing more important than enjoying life. Never bargain with your necessities or it might adversely affect your winning capacity.
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