Everyone needs a robust savings plan to secure their financial future by investing a small amount regularly. Read on to know more about what is savings and how you can make it.
In simple terms, a savings plan is a financial road map that helps you manage your finances well and secure your financial future. If you plan your savings well and follow it sincerely, you can be sure that you can live a financially independent life.
Making a savings plan is easy, but following your plans requires commitment. You must also know that there is no one-size-fits-all plan. You must make your plan based on your specific financial goals, risk-taking capacity, and liquidity needs.
So, how to make a savings plan that works? The following tips will come in handy:
Firstly, take your time reviewing your current financial condition. Know your income, expenses, and liabilities. This will help you know exactly how much disposable income you have that you can divert towards savings. For example, if you generally spend the entire salary before your payday, it does not make sense to save Rs. 1000 per month.
Instead, you can review your budget and see where you can pull back on the expenses and start saving Rs. 300 per month. When you follow a plan, you can give yourself a chance to accomplish smaller wins and prepare yourself for larger savings in the future. If you are looking for the best investment option to park your savings, you can consider opening a Recurring deposit account; it provides decent returns and encourages regular savings.
No matter what your savings goals are, whether it is to save Rs. 1000 per month or Rs. 10,000 per month, you must assess your spending and identify areas where you can cut back or reduce. You can easily do this by reviewing your past few months bank account statements and jotting down the expenses. You don’t have to necessarily give up on your once-in-a-month dine out with the family, but you can probably consider using public transport rather than using the car and save on the fuel expenses.
If you are already on a shoe-string budget and don’t have scope for savings, you can consider increasing your income by taking-up a weekend part-time job or selling off your unused asset.
Another way to make your savings plan more effective is to automate the savings. You can use your bank’s mobile application or website to provide a standing instruction to the bank to auto-debit your account on a specific day with a particular amount towards the savings scheme. For example, you can instruct the bank to debit Rs. 1000 on every 5th day of the month or the payday towards the savings scheme. Over time, you will be able to grow your savings with little effort.
Rather than keeping your small savings in the bank, you can look for alternative investment options that provide higher returns than a savings account. For example, you can consider investing in mutual funds. Today, you start a SIP with as little as Rs. 500 per month. This way, you can make every Rupee count and get better returns. Do your research well about the different schemes available and choose what best suits your specific needs and financial goals.