Friday, May 18, 2018

Turn Saving into a Habit

Saving is one of the most important tasks in the hands of earning people. It is expected that you willing saving a part of your earnings. It is well known to everyone that it are only the savings that help in leading a good, secure and comfortable living even in days of no works or retirement. It is very much important for everyone to have a clear view regarding one’s financial needs in coming days and saving accordingly. So achieve the goals good, secure and comfortable financial life you need to turn saving into a habit.

There are some ways to save one’s earning. These are:

Distinguish between Wants and Needs
You can save millions if you are able to clearly distinguish between wants and needs. Needs can be simply identified. Needs are the items that are necessary to sustain a proper life. These needs are Shelter, food, clothing, transportation and entertainment etc. Wants are those things that enhance or possibly improve one’s lifestyle. This the most important ingredient of saving habits.

Ration your funds
You need to divide your earnings in different parts for different purposes. You should keep aside a fixed amount of money at the start of every month for the daily and usual expenses and have to ensure that you don’t swipe your debit or credit card or cash during the month for daily needs. Following this habit you will be able to discipline your spending behavior and control cash outflow. This helps in saving.

Avoid credit cards
In current era plastic money important part of life but has negative huge impact on your finances. If possible try not to have a credit card as most fall prey to the lure of plastic money. The convenience of credit cards is hard to resist but if you want to save, pay cash whenever possible. If you cannot live without a credit card, find a card that does not charge high annual fees and comes with cash saving benefits.

Force yourself to save:
Forcing yourself to save is the best way to save as after some times this forced behavior will turn into a natural habit. For this purpose sign up for a systematic investment plan or some form of monthly investment that is deducted directly from your bank account every month. That way, you’ll never have access to those funds so will never need those funds for any purpose.

Money Saving Tips

1. Do not keep credit cards with you. With credit cards, you often end up spending more than what we should. First clear up your credit card debt.

2. Prepare a budget for your expenses in the beginning of every month and make sure to stick to it as much as possible.

3. SHOP smart, RESEARCH prices, stores and sales.

4. TRAVEL within the budget.

5. Have separate savings and current accounts. And use only current a/c for daily expenses and try to keep saving a/c untouched as it should be used for any emergency need.

6. Have a clear idea of what you need.

7. Do not show largesse.

These tips may seem to be very familiar and cheap as you may think that you being advised to become a miser but same are not true. You are advised to take care of your money only.

Saving tools

There are many saving tools available for the saving purpose. Some of these provide high returns with high risks with no surety for the money and some offer secured returns with lower risks. These investment alternatives are as below (Indian Context):

Bank Fixed Deposits

In a Fixed Deposit Saving Scheme a certain sum of money is deposited in the bank/post office for a specified time period with a fixed rate of interest. When you want to invest your hard earned money for a longer period of time and get a regular income, Fixed Deposit Scheme is ideal. It is SAFE, LIQUID and FETCHES HIGH RETURNS.

Recurring Deposits

Under a Recurring Bank/Post Office Deposit Saving Scheme, investor invests a specific amount in a bank/post office on a monthly basis for a fixed rate of return. The deposit has a fixed tenure, at the end of which you get your principal sum as well as the interest earned during that period.

RBI Bonds or RBI Relief Bonds

RBI Bonds are tax saving bonds that have a special provision that allows the investor to save on taxes. These Bonds are instruments that are issued by the RBI. The interest is compounded half-yearly. Maturity period of RBI Bonds is five years, and interest received is tax-free in the hands of the investor.

Company Fixed Deposits

Fixed deposits in companies that earn a fixed rate of return over a period of time are called Company Fixed Deposits. Financial institutions and Non-Banking Finance Companies (NBFCs) also accept such deposits.

Life Insurance

Life insurance saving schemes for government owned Life Insurance Corporation of India and other private life insurance companies like Bajaj Allianz, Birla Sun Life Insurance, HDFC Life Insurance, and ICICI Prudential.

Other Saving Tools

  • Post Office Monthly Income Scheme (Post office MIS)
  • National Savings Certificates (NSC)
  • National Savings Scheme (NSS)
  • Kisan Vikas Patra (KVP)
  • Public Provident Funds (PPF)

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