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Do you need a financial trump card? World Savings Day is a great reason to go over your finances and get prepared for the year ahead. This blog will provide tips on how to raise your savings to new levels and accomplish your financial goals.
According to a survey conducted by Scripbox across 630 participants, while 90% of the participants believe their financial health to be an important aspect of their well-being, when it came to savings, numbers spoke otherwise. About 50% of the respondents said that they saved only 20% of their incomes while 20% respondents saved 20% to 30%. Is this saving enough?
Well, if you consider inflation and the rising costs, it definitely isn’t. While the 50-30-20 rule states that saving 20% of your income is sufficient, you need to factor in inflation and also a suitable avenue for allowing your savings to grow.
While saving 20% is definitely a step in the right direction, you need to back it up with smart investments and a proper financial plan.
And how do you do so?
It is not rocket science. Just a few tips and you can give your savings the boost that they need to fulfil your financial goals.
So, here are some small, yet effective, tips to give you that little nudge to ramp up your savings –
Lack of budgeting – a very common mistake which proves fatal for your savings. To ensure that you don’t spend beyond your means and to rein in your income, you need to make a budget and stick to it. When the month starts, create a budget listing your incomes on one side and the expected monthly expenses on the other. Give your expenses a little leeway so that if they overshoot, your budget doesn’t go haywire. Make a provision for miscellaneous expenses too because you never know which unforeseen expense might crop up.
After you are done with your budget, make it a solemn oath to stick to it. Keep your budget handy or in mind when spending and ensure that you don’t go overboard. A little budgeting goes a long way in ensuring that you save.
When you make a budget, you allocate your income towards expenses to find out the disposable income which can be saved. You should, then, invest a primary part of your disposable income so that you wouldn’t be tempted to overspend. Invest first, spend later.
When it comes to investments, opt for a proper savings plan which would keep your investments safe and also help them grow. Guaranteed return plans offered by life insurance companies can be an ideal fit. These policies help you create a corpus for your financial goals and also provide insurance coverage. If you invest in participating plans, you also earn bonuses which enhance the corpus and create wealth.
So, invest in endowment or money back life insurance policies with a long-term horizon so that you can invest in a disciplined manner and build up a corpus for the different financial goals that you have.
If the pandemic taught us anything it was that emergencies can wreak havoc on your finances. That is why emergency planning is a must. Set aside 3 or 6 months’ worth of your income in an emergency fund and keep the fund liquid. Do not touch the fund except in the case of emergencies. This fund would help you tide over tough times without disturbing your other investments which have been earmarked to your goals.
This is the deal-breaker. The 50-30-20 rule works only if you step up your savings to keep pace with the rising inflation. Inflation is real and it eats into the purchasing power of money. Take for instance grocery shopping. Hasn’t your grocery budget increased this year compared to the last?
To keep pace with inflation and to make sure that your savings are optimal, you need to increase them, regularly. Try increasing your savings by 5% to 10% every year. This would boost your investments and help you save more towards your goal. Thereafter, even in the face of inflated prices, your savings would be optimal in meeting your financial goals.
Which of these tips seems non-implementable?
Saving and investments are not very hard. A few pointers and you can create a suitable portfolio which creates wealth for your needs. That is what the World Savings Day is all about – saving enough to achieve financial independence.
So, this World Savings Day, implement these tips and give your savings the much-needed boost.
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