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Savings are an essential part of your life. You save money to sustain yourself and your family, to pay for your rent, utility and medical expenses amongst others. They also help you pay your EMIs and clear the outstanding debts. Savings are also essential for you to reach your financial and life goals. Even though it is a vital part of your life, you might have difficulty saving.
Saving money can be difficult due to many reasons. You may be an impulsive shopper splurging on every sale that comes your way, or you may be going out every week or spending on things that you do not require, or you may just be not organized enough or lack proper planning. Whatever is the reason you must realize the importance of saving and start before it is too late. There are some easy ways to increase savings. Read on to know more about them.
Set aside money for an emergency fund
This is one of the most important tips that you should keep in mind when saving money. A layoff, an accident or a sudden medical illness can be detrimental to your finances. In case something happens to you, your family will be out of income to sustain themselves, especially if you are the sole breadwinner.
People often forget to set aside money for emergencies and end up diving into their savings to pay for urgent expenses. Hence, it is imperative to arrange for a backup fund that can help you and your family during emergencies. Experts recommend keeping aside expenses of at least 4-6 months to help you in emergencies. In emergencies, you or your family can use this fund to pay for the daily expenses.
But how do you decide how much amount to set aside? Start with saving enough to pay the EMIs and insurance deductibles. Add the house rent and maintenance, the school fee and the utilities to the mix, and you will arrive at a monthly estimate. Multiply this by the number of months you need to save for, and you have a target.
Automate your savings
There are bills to settle, EMIs to pay and other financial goals to meet. Amidst all this, you might forget to save. Remembering to save is as essential as saving itself. The availability of bank reminders, Standing Instructions (SI), and automatic bank transfers to the bank can help us with this. A thing that you can make use of is the recurring deposit. You can find this option easily on your online banking portal. You can also visit your bank to set up recurring deposits. Open a new savings account and set up weekly transfers from your salary account to this account. This initiates a weekly transfer of a specific amount to your savings account. A small deposit every week can help you accumulate a significant corpus over time.
Put the cash windfall gains to good use
Bonuses, cash gifts and tax returns are excellent incentives to save. These are an addition to your monthly savings. Instead of splurging this money on things that you don’t want, you can utilise this to pay off the bigger debts that you have. You can use the extra amount to pay the pending bills, car, bike or home loans or pay off any outstanding expenses. Keep yourself from giving in to the urge to spend this amount on unnecessary things and purchases that you do not need. These bonuses can go a long way in giving impetus to your savings and help meet your goal early.
Use a mobile application
Mobile phones have made our lives easier. There is an application for everything. Similarly, there are applications to assist you in saving as well. Different Apps take diverse approaches to help you save. Research about them and choose the one that best fits your needs and can help you realize your financial goals. You can opt for a daily, weekly, or a monthly savings plan in the app. The app might even allow direct linking of your bank account to make saving easier. There are other Apps as well, which do not make saving look like a chore. They make it fun and exciting by rewarding you with points, incentives and other rewards every time you save. This motivates you and can result in an increase in your savings.
Building up your savings is a slow and steady process. Do not be demotivated if you are unable to reach your target initially, or you falter and spend on that new dress or buy yourself a new phone. It takes patience and discipline to increase your savings and meet your financial goals. With proper planning, a well-thought-of strategy, and a little help from your financial planner or CA, you will be there in no time.
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