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| October 31, 2022

Top 10 Reasons To Save Money And Invest For Future

“Saving for a rainy day” is an adage we all have heard growing up. Money doesn’t only give you the jumpstart to lead your life the way you want to but it also has a strong psychological impact. Having financial resources means financial independence. You don’t have to stress about the monetary aspect of fulfilling every little need or desire. As with almost everything, discipline and consistency is the key to saving money for a stress-free future.

The recent pandemic was a great eye-opener. With job losses and the shutting down of businesses, income sources dried up. And only those who had a financial safety net managed to survive the economic downturn. Living paycheck to paycheck, not saving every month, and seeking instant gratification with your wants could spell future financial disaster. By incorporating a few simple money-saving tips, you can easily create a corpus to take care of monetary emergencies.

While keeping money in a savings account may give you a sense of contentment, it is not a smart way to grow your money. Investing your savings in instruments that give you a good rate of return can amplify your money. There are many avenues to do so- best-performing mutual funds, carefully selected stocks, PPF, high-yield bonds, real estate, etc. However, care should be taken to diversify your investment portfolio and not invest in a single asset class to gain the maximum rate of return on your investments. A smart financial plan is one in which you use your savings to invest and maximize your returns to ride over life’s uncertainties comfortably.

Top 10 Reasons To Save Money And Invest For Future

Let’s face it - saving every penny possible isn’t as gratifying as spending on luxuries is. But spending recklessly without having enough spare monetary resources could force you into a debt trap. Many things in life aren’t under our control but do have control over saving our hard-earned money.

So, why should you save money and invest in your future?

  • Attaining Financial Freedom: Financial independence is the underlying idea behind saving and investing. It provides you with the confidence to pursue your dreams and goals without worry. With a solid monetary foundation, you can go on your dream vacation, plan your retirement, or pursue your passion among many other things. It is your path to a stress-free future life and lifestyle.

  • Living a Debt-free life: In today’s world we are surrounded by many enticing offers- mega online sales, zero-interest EMIs, credit card reward points, Buy Now Pay Later schemes, instant personal loans, etc. And giving in to these temptations without keeping an eye on your financial condition could pile up your debts. Saving your money enables you to avoid vicious debt cycles that are very difficult to get out of.

  • Planning for Emergencies: Emergencies arrive without warning. A critical illness, job loss, or a sudden requirement for business capital could cause immense anxiety. It is advisable to always budget and save money to build an emergency cash reserve to handle such sudden large expenses. An emergency fund ensures that you don’t have to borrow money from outside, paying huge interest.

  • Securing your child’s future: Every parent wants to fulfill their child’s every wish, including their dream career. However, with education costs rising exponentially, money in the bank would barely cover the expenses. A diversified portfolio with the potential to generate a good rate of return is the way to ensure that your child gets the best in life.

  • Preparing for the loss of income: There would come a time when you stop working. With a longer life expectancy, how to lead a comfortable post-retirement life? Years of anticipating future expenses, smart savings, and investments with a good rate of return will ensure that you don’t have to depend on your children to meet every need.

  • Getting Peace of Mind: Not having enough money comes with a lot of stress and anxiety. It affects us psychologically too. Even a small amount saved every month builds up to a big corpus with the power of compounding. And when you are assured of a safety net in times of need, it guarantees mental peace and financial stability.

  • Purchasing Big-ticket items: Purchasing a home or a car is no longer a luxury. The idea of living in your own house or driving your car fills us with a sense of accomplishment. Taking a loan and taking a loan on your terms are two different things. If you have been prudent with your finances in the past, you are likely have a good credit score. And with a good credit score and a big down payment on the house or car, you can negotiate the loan terms with the lender.

  • Building Your Wealth: How and where to invest your money is just as important as saving money. With FD rates plummeting and nominal savings bank interests - they are hardly smart avenues to grow your money. Best performing mutual funds and stocks, plans with tax benefits, etc can give you good returns on your investment by beating inflation costs.

  • Developing a secondary income source: Investing in a house or a commercial property can guarantee you a steady income flow by way of rent. This passive income stream could run parallel to your primary source of income.

  • Improving Financial Well-being: A habit of saving money requires patience, practice, and discipline. When you consciously and consistently strive to avoid unnecessary spending, the financial discipline permeates to other areas of your life too. And when you are financially stable, your mental well-being is taken care of too.

Top Money Savings Tips for a Secure Future

We may not be able to control external factors but our actions are in our control. And our actions determine how we manage our finances.

Here are some simple but effective ways to handle money to save money:

  • Keep a Track of your Expenditures: Knowing where your money is spent can help you in cutting down on unnecessary expenses.

  • Make a Budget: Our recurring monthly expenses don’t vary much. Creating a monthly budget and sticking to it prevents you from going off-track with your expenses.

  • Set Savings Goals: Have a financial goal? Set saving targets with timelines. This will give you an idea of how much to save monthly.

  • Use Credit Cards Responsibly: Try to limit your credit card usage to 30% of the credit limit. This prevents huge credit card bills which might require you to borrow money, thus increasing debt.

  • Separate Wants from Needs: Smart money management means spending on only necessary things.

  • Look for Deals and Discounts: If you can save some money by using a coupon, why not?

  • Research and Compare: Before buying anything, be it a loan or a TV, always make sure to compare prices, interest rates, offers, etc.

  • Don’t Delay Bill Payments: It will surprise you how much money can you save on late payment fees and interest charges when you make bill payments on time.

The best way to plan your finances and maximize your investment returns is to start early. When you get into the habit of saving regularly and investing smartly, over the years, the results will surprise you. Smart investors enjoy the good things in life by following the “saving before spending” mantra.

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