10 Tips to Start Saving Money and Plan for The Future
Everyone wants to save money and retire rich. But most of us live from one pay check to another. Young people may tend to think that saving for the future means saving for one’s retirement. But what it means is saving enough to meet your financial needs at different stages. Here are 10 tips to help you save for a secure future:
Start with a Plan:
The first thing you need is a financial plan. This will identify your risk appetite, financial responsibilities, and ambitions in life. A good financial plan will help you understand how much you need to meet these goals.
Get Yourself Insurance:
Many people pursue investment products right away. This is a mistake. The first step of financial execution should be to get life and health insurance. This should be commensurate with your age and liabilities.
Work with A Budget:
This is an essential step to understand and regulate your cash flow. Make a realistic budget and stick to it. You will then know exactly when and how you are spending your money.
Chalk Out an Investment Plan:
Once you have fixed your personal budget, it is time to move to your investment plan. Let your risk appetite determine the kind of products you choose. Do not invest in any product that you do not understand. For instance, the easiest product to understand for a novice is a fixed deposit. This offers fixed and guaranteed returns for a period of your choice.
Also, ensure that the investment products you choose offer inflation-adjusted returns. Otherwise, it will eat into your purchasing power. This will prevent you from meeting your financial goals.
Here’s a handy guide to the various investment options you have:
Identify Wants and Needs:
Young people often complain that they do not earn enough money to invest. When you are young, saving and investing seems hard. This is often because you cannot tell the difference between your needs and wants. Making a simple distinction between the two will help you save more.
Build a Retirement Fund:
If you think you have enough time to start saving for retirement, think again. Any delay may prove to be a costly error later. Build your retirement corpus with the right investment channels early in your career. This will help you retire rich.
Use Debt in A Judicious Way:
There is hardly anyone today who does not utilise credit facilities. If you are servicing a credit line or two, make timely repayments. This will keep your credit score in order. Otherwise, you run the risk of falling into a debt trap. This may throw your financial plan off track.
Save For a Rainy Day:
Invest in a contingency or emergency fund. This will take care of your liabilities for at least three to six months if there is no cash flow. You can deposit your money in a short-term deposit with no penalty clause. Or, park your money in a liquid fund. This will help you meet your needs in an emergency.
Keep Some Headroom for Fun:
Secure your future finances, but do not ignore your present. Use your money to do the things you like as well.
Review Your Plan:
A financial plan cannot be etched in stone. Life may throw a spanner at you at any time. A death, an accident, or a divorce could alter your financial ambitions. In such cases, rectify your plan to meet your changed circumstances. Even if there are no major shake-ups, review your plan at regular intervals. This way, you can track the performance of your investments.
Non-banking financial companies (NBFCs) such as Bajaj Finserv offer a range of investment options that can help you plan for your future and reach your financial goals. Go on, take the first step and start investing today.