We save money because we can’t predict the future. Saving helps us stay financially prepped for any emergency that might arise in our daily life. There could be a number of things for which you must set money aside.
Saving money doesn’t come naturally and is a habit that must be cultivated over the years. This will provide a financial cushion and you can finance the different necessities like buying a vehicle, a down payment for the purchase of a new apartment, a vacation or emergency medical expenses for your family. It’s important to save money to avoid falling into debt while paying for basic necessities.
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Plan your budget by taking into account, needs and not wants. Think of a realistic budget and categorize your money carefully. Your budget must include every rupee earned and spent. You can save effectively by setting aside 20% of your salary.
You must follow the thumb rule: You can save money from your salary each month by following the 50 – 30 – 20 rule. Firstly divide your monthly income into three parts. The first 50% of your salary must go towards necessities like home rent, home loan EMIs, and groceries and so on. The next 30% of your income must go towards your wants. Devote a budget for the things that you need to buy.
The remaining salary i.e. 20% must go towards your savings. Have an emergency fund and put savings in this account.
It is very important to diversify savings. Creating an emergency fund will help you stay prepared for financial emergencies. It is important to buy a life insurance plan like a term life insurance plan. You can also save tax.
Investing in riskier assets like equity mutual funds or stocks raises money in very little time and helps gain profits. Do note that these are risky investments and you can lose money as well.
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Budgeting allows you to create a spending plan for your money and ensures you always have enough money for the things you need and the things that are important. Following a budget or spending plan will also keep you out of debt or help you work your way out of debt if you are currently in debt. Given below are some general saving tips:
It is important to develop a budget using your net income. Without money put away in savings or investments, any emergency or funding becomes impossible. It might also lead to borrowing from lenders at high rates and this leads you to the debt trap. Below discussed are some of the expenses that you can curb to save money:
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