Saving money is really important and thinking “How much money should I save?” can be a difficult question. We all save for retirements, emergencies etc. but apart from them, there are many things to consider. And, often people don’t talk about savings and whenever this question arises people become clueless!
People earn different amounts of money each month and have a variety of financial obligations every month. Therefore, it is obvious that one specific plan will not work for every person.
However, there are some basic steps that one can follow to determine ‘how much money should one save every month’.
1. There is a rule that one must save, 10% of their salary. It is said that this savings is for your retirement. There are many who are new to this concept and this will help them in starting a type of saving. It is important to understand that whether you make a lot of money or start to do savings late, one will have to save more money.
This 10% savings rule works well only when the person has started saving since the age of 20 and does so in a consistent manner, as well as they save 10% of whatever they have been earning. The question to ask here is what percent of people start working in their 20’s and how many of them actually do savings. Usually, the age at which people give a serious thought about savings, as well as retirement, is when they turn 40 and 50.
2. The reason one must think beyond doing retirement saving is that day by day there is fall in the interest rates and it is not feasible.
Fixed deposits are mostly below optimal apart from when we consider it with respect to tax. The investment market in India has been evolving after there has been liberation because of which there have been a lot of investment options. When you think beyond FD will gain you more returns.
3. Even before spending money, try to save it. Many times it happens that after all the monthly expenses there is nothing left.
Try to cut down on your expenses to do savings. Once your salary is credited you try to buy something you would have liked. But one must learn the difference between what they want and what they need. One major saving can be done when you stop using money that is in a plastic form that is credit card and debit card.
4. Building your saving will go long way. Try to differentiate between your needs and your desires/wants.
Another way to construct your savings is by making the savings automated. Make use directly depositing option from you bank transfer which will automatically transfer some amount. As soon as you get your salary, make sure you put some amount into savings instead of waiting that there will be something left. Whenever you get some extra amount keep it aside as savings. Make sure to make payments on all bills on time to avoid late payment fines.
5. Setting some proper goals for doing the savings will help you do savings for sure. When you set a goal it will give you a cause to do saving and you will be forced to set some money aside rather than just saying we will set Money aside.
Set a Goal depending on your lifestyle. It will depend on whether you are single or you are married.
6. Keep saving till the saved money becomes enough to fulfil your goals. Don’t stop until you reach that point.
Now, remember, this is just the beginning point of a habit that will help you immensely in your future. Remember, the earlier you get into this habit of saving, the more beneficial it will be for you.
The easiest way to ensure that you are saving diligently is to automate the process of saving. So that you do not spend time and energy month after month in figuring out ways to save.
The bottom line is that savings in a right way and for right things will help set your retirement and make your future set when you enter your old-age or you retire from work life.