The million dollar question in our minds is always how to save money and plenty of it for the future. However, although most of us keep thinking about saving money , an overwhelming majority seldom act on these rather necessary urges, particularly at a settled stage in life where monthly inflows take care of most expenses. Yet, building up a future savings kitty is very important for several reasons as you may already know. Creating the habit of savings is also extremely necessary for future prosperity.
Building up a sizable corpus in savings will always help you move ahead with confidence, prepared to face any future obstacle smoothly and without financial hassles. There can be multifarious scenarios where you truly realize the importance of building ample savings for future needs. Suppose you take an elderly family member to a hospital where cashless health insurance is not possible and the insurance company will reimburse you later on. This means that you have to pay a few lakh rupees from your own pocket for the time being before you get it back. Naturally, if you do not have ample funds saved up, you will find yourself facing several issues in the bargain.
Top 5 ways to save your money
While there is an avalanche of money tips out there, a lot of it is actually common sense. It all starts with the will to save and grow wealth for the future. That is the most important part of saving money. Let us take a look at 5 of the top ways to accomplish this objective.
- Invest, Invest, Invest
If it sounds confusing, let it be stated that the best way to save money is to invest it in wealth-creating instruments for the future. Too many people fritter away hard-earning monthly income on casual expenditure.Gone are those days where you have to make offline investments; with the advent of technology, only investing has taken the market by storm. You can simply invest a few thousand rupees in online investing platforms like Groww mutual funds or other SIP based schemes will not dent your pocket while helping you build a sizable corpus for the future. Set up an auto-debit facility with your bank wherein the money invested in SIPs is deducted automatically every month. This will help you build financial discipline while putting aside a certain amount every month for future security.
You may also consider gold investments as a way of hedging yourself against inflation and rising costs in the future. There are various investment options/schemes available in this category today. You may also consider investing directly in the stock/share market by purchasing shares of companies across various categories. However, professional advice and knowledge of the stock market are prerequisites in this case. If nothing else, at least go for an investment channel like PPF (Public Provident Fund) with a 15-year lock-in period and a Government guarantee along with an attractive rate of interest. Whatever you invest today counts as your future savings and will come back to you manifold. This is one principle that you should never forget.
- Smart Banking is what will help you
Your bank naturally has a lot to do with the quantum of money that you eventually end up saving. Banking smartly will automatically help you save more money. For starters, if you are looking to start a fixed deposit (FD), then choose the bank which gives you the highest rates of interest so that you can compound your money and grow it substantially over the years. Have a recurring account in place for mopping up short-term savings. Choose a bank that offers a decent rate of interest on savings bank accounts. Opt for a bank that has lower fees/charges/rates for all the services that you avail of across products/basic offerings. If you have a home loan, switch to a bank offering a lower rate of interest for saving more on your monthly EMI. Look out for advantages such as zero/low overdraft and ATM charges and so on.
Keep an eye on your bank account for the deductions in terms of charges and fees. Use the ATM sparingly and you will naturally save on charges for using the machines. Plan your withdrawals sensibly every month and you will find yourself saving some handy pocket-money in the bargain as well!
- Make your own monthly budget
This is possibly the most important one out of all the money tips that you have come across and does not require any rocket science or complexity. Sit down with your family members and work out an accurate monthly budget that lists down all expenditure incurred every month including costs like EMIs, utility bills, staff payments, service charges, transportation/commuting charges, fuel costs, education and other costs of children, medicines, household utilities and so on.
List down your leisure and recreational expenditure and have an emergency component for meeting sudden expenses listed down as well. This will help you stay on track at all times. Once you have a monthly budget written down, you will know how much you can save with your current income. Try and achieve this within a particular duration.
- Manage Debt Smartly
Debt management is something that has to be done smartly in order to build up your savings while minimizing cash drain. Always pay EMIs on time without defaults, have 2-3 months’ EMI saved up separately so that you do not mistakenly default or miss out on paying EMIs during emergencies. This will save you from hefty penalties and charges.
Try and clear your credit card debt (with the highest rates of interest) and other personal loans as fast as possible. Keep it to a home loan which will help you save on taxes and possibly a vehicle loan. In case of the latter, try and pay it off as fast as you can.
- Cut Unnecessary Expenditure
There are no two ways about this; everything that you can do without qualifies as unnecessary expenditure. Jot these items down in consultation with your family members and you will be surprised to see how much you can save by simply eliminating costs under a few heads. Sometimes, foregoing a few nights at the pub or expensive movie tickets rewards us handsomely in the future. Remember that and operate according to your financial situation and targets.
On a closing note
Emergency situations can arrive at your doorstep anytime. Suppose there is a sudden financial need in the family and you have to meet the same. Suppose additional costs keep coming up in terms of your children’s weddings, higher education, buying a house, car and gadgets and so on. What if a costly household gadget breaks down and you have to replace it? What if you lose/damage your phone and have to get it replaced immediately? These are costs that you can manage from your savings, that is if you have enough! Enough on possible scenarios where your savings will be your source of comfort and security since there are hundreds if not thousands of possible situations that can be listed (and we haven’t got all day!).
Now worries, following the above-mentioned tips will help you save money considerably while inculcating greater financial discipline into your life as well.