Whether you’re a young adult ready to start saving for retirement, a 50 - something ready to pay off your mortgage or a senior citizen living on a fixed income, these tips can help you build savings, reduce debt, boost income and invest wisely.
- Compulsory saving: Instead of putting aside whatever money is left at the end of the month, start putting aside a fixed amount at the beginning of the month instead. That way you have a good amount put aside as saving.
- Save for emergencies: Saving for emergencies is the foundation of a good financial plan. If you put aside some amount every month for emergencies, you will not be nervous and you will not have a breakdown in times of crisis. Also, people who save for emergencies then do not have to dig into their principal amount or other savings in times of unforeseen circumstances.
- Spend less, save more: Spending less, leads to saving more. A lot of times we tend to spend on things in haste. Know the difference between what you want and what you need and you will be able to save more instantly.
- Take baby steps towards saving: No one saves millions overnight, If you find saving to be a challenge, start by trying to save just Rs 1000 or Rs 2000 for a specific purchase or expense. When you’ve saved and spent that sum, continue to save that amount or more so you can pay for what you need with cash instead of credit. If you’re unable to save any money for major purchases and long - term investments, you’re living above your means. That calls for major adjustments, like trading in a new car for basic reliable transportation or moving to more affordable housing.
- Stick to an investment plan: No investment yields results overnight, there will be ups and downs but sticking to a plan longer will always give better results rather than changing plans every few months or even years. Investments give good results only when they are made to last longer.
- Do not be afraid to ask for help: You may be a beginner at this and there is nothing wrong in taking advice from someone who understands the numbers and the calculations better than you do. It is your money and it is important you understand where you are putting it before you go ahead with any investment plans.
What is the difference between saving and investing?
Saving is putting money aside, bit by bit. You usually save up to pay for something specific, like a holiday, a deposit on a home, or to cover any emergencies that might crop up, like a broken boiler. Saving usually means putting your money into cash products, such as a savings account in a bank or building society. Investing is taking some of your money and trying to make it grow by buying things you think will increase in value. For example, you might invest in stocks, property, or shares in a fund.
If you are wondering whether you should save or invest? The answer depends on your goals and your financial situation but always do all the homework before investing and know the plan before you put money in it.
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