You must have heard your parents talk about the importance of saving as a child. It is in fact one of the most important and underrated financial practices that an individual adopts.
In today’s world, when everyone wants to live a luxurious lifestyle, you need to have robust saving schemes to help you pay for that lifestyle. The most important step in that direction is to spend smartly and to develop a savings plan that will not only save your money but also increase your wealth overtime.
Not many people know this but saving money is not just about investing in your future. It is also about securing your present and ensuring that you do not make the same financial mistakes you made in the past. It is a well-structured plan that helps you live a disciplined life with regards to your money.
In this article, we will look at some reasons why you need to have saving schemes and how it will help your finances in the long run.
1. Protection Against Financial Emergencies
When you have sufficient money in your bank account, you can rest assured that you will be able to sail through most problems and difficult situations. It helps you manage your crisis more effectively and also provides you adequate support during financial emergencies. For instance, during the pandemic-induced lockdown in 2020, a healthy savings plan has helped many stay afloat when most businesses were shutting down and the economy hit its lowest point.
2. Meet Your Long-Term Financial Goals
Money can help you fulfil your dreams by allowing you to reach your financial goals. You need money for everything. You can use your saving schemes to buy your favourite car, put a deposit on your dream house, start a new business venture, fund your child’s education abroad, etc.
3. Secure Retirement Plan
A savings scheme offers long-term security by acting as a retirement plan. When regular income stops coming in after your retirement, you will be able to rely on your savings plan to continue getting a steady stream of monthly income and live an independent life.
4. Complement Your Lifestyle
Saving schemes not only save you money but also grow your wealth by power of compounding. As a result, you are able to make money from your savings that you can use to pay for experiences, such as travelling abroad.
Tips to Save Money
Saving money is not simple. It takes proper planning to know exactly where you can cut corners. A good way to start is by assessing your spending patterns. Once you have objectively reviewed your spending, you need to make a list of your priorities to redistribute your funds. For instance, if you make Rs. 60,000 a month, you should set aside at least Rs. 10,000 for savings. You can put it in an FD account or other long-term savings plan. You can also talk to your employer to know about TDS on salary so that you can plan the investment of tax-saving instruments as well.
In the long run, the best saving schemes are made up of instruments that secure your future and also grow your savings through wealth creation. Understand more about savings plan and how it can help you increase your savings.
Savings Plan and Reasons to Have One
Saving schemes are plans that give you an opportunity to save, invest, and accumulate wealth over time. These plans teach you how to invest systematically and in a disciplined manner. You can choose your investment instruments as per your budget and requirements.
Here are some reasons why you need to have a savings plan:
- Protects your family’s future
If you invest in a life insurance plan as part of your savings plan, you can rest assured that your family’s financial wellbeing will be secure, in case something happens to you.
You can plan your saving schemes as per your needs and future goals. You can choose the investment funds that are suitable to your risk appetite and objectives.
When you choose plans like ULIP, you are eligible to partially withdraw funds after completion of a 5-year lock in period. These plans offer short-term liquidity to pay for emergency expenses.
Systematic saving plan
A saving plan will encourage you to form a saving habit that will help you set aside funds for long-term goals on a regular basis.
Saving schemes not only help you save money but also help in its accumulation by investing it in market-linked investments.
You can save taxes on your saving schemes u/s 80C of the income tax act up to Rs. 1.5L per annum towards your premium payments for life insurance plans.
It is never too late to start investing in a savings plan. Read this article to know how you can get started.