The importance of saving money is known to everyone from an early age. You may have goals that you want to achieve and dreams to fulfill in the later years, but it is all very difficult if you are not planning for your finances right from the beginning. The right savings habit from an early age and a disciplined approach towards parking your money in the best instruments is all it takes to have a stress-free and enjoyable life, even after you have retired.
If you are smart enough to put a little amount aside from your earnings regularly, then that is what will let you take advantage of opportunities like starting a business at a later stage in life, investing when the markets are down or simply splurging in the later years of your life. Find yourself the best saving plan, and consult an advisor if need be, to make sure that your money is not sitting idle but working as hard as you are to grow.
Saving Money Vs. Investing
One of the most common doubts people usually have when they start is whether they want to be investing their money or simply saving it. Both these terms are often confusing, especially for those who have just started learning about putting money aside and earning on their savings. How you handle saving your hard-earned money vs how you choose to invest will impact your financial wellbeing and peace of mind in the longer run.
Saving money simply means parking cash in very safe instruments, where the risk ratio is extremely low. This is usually the amount you keep aside for emergencies or unforeseen circumstances because it is easily accessible to you. Your savings plan can include simply parking the money in your savings account or opting for instruments like debt funds, which have a very low-risk appetite.
Investing money, on the other hand, is about letting your wealth grow, and if you do your research and find the best saving plan for your needs, it does not take long to reap the benefits of investing. The longer your money gets to grow better it is for you.
Ways To Make Saving Money Easier
If you have found yourself searching questions like ‘What is investment?’ and “How do I start earning money with my savings?” then you’ll be thrilled with the endless opportunities out there, for you, in the world of investments. Investment is the term coined for assets that are created by an individual with an intention to grow their surplus money. Once you start investing your money in the right savings plan, then you will surely realize the power of wealth generation in the long run.
Check out some of the best ways to make saving money easier:
- Know your financial needs: Before you start searching for the best saving plan on the internet, it would be wise to analyze your financial situation. Make a note of your current expenses versus your earnings, how many emergency funds you have at present, and then evaluate your risk tolerance.
- Create investment goals: Once you know your risk tolerance, pen down goals for which you would like to start saving. The best saving plan differs from person to person, and you need to know what goals you want to start investing for, be it buying a car, home, planning an international trip, or simply saving for your retirement.
- Diversify your investments: From mutual funds like debt funds and balanced funds, which can help you invest basis your risk appetite, to investing in stocks, and from government schemes to investing towards saving your tax, every investment has its own merit. Ideally, you should try and diversify your portfolio to make room for all of this and more.
For example, investing in a Public Provident Fund or in ELSS (tax saving schemes) will help you claim a tax deduction for that financial year. Along with earning returns on your investment, you can also save tax of up to Rs. 1,50,000 in the old tax regime, according to the Income Tax Act of 1961.
- Know your investment period: While many like to save for the long run and forget about their investments, if you have short-term goals like saving up for a trip, buying a car or bike, then you should keep a period for your investments. Investments for short-term goals are made usually for a period of 1 to 3 years, and the best savings plan can get you good returns too.
Be it creating wealth, saving for future needs to provide for your family or simply have a retirement nest egg, saving and investing are equally important. A disciplined savings approach from the beginning will earn you handsome returns and peace of mind in the long run.
