SAVING: Is an incredible virtue!

SAVING: Is an incredible virtue!

In economics, saving is the amount that is left after spending.  However, wealthy people work differently; they invest first and spend what’s left. Whereas, others spend first and invest what’s left.

We can’t control interest rate movements or forecast what will happen in the stock or real estate market! But, we can certainly control when we start and how much we save. Starting to save early puts time by our side, our savings will add-up, funds would work longer with the power of compounding, thus, piling-up more cash in our bank accounts.

A rupee saved is a rupee earned, goes the saying. But just saving is not enough; your money should grow according to your needs. This objective can only be met through investing wisely.  When we stash our funds in the right places, our money would start to work harder, making us lead a relaxed and comfortable life.

However, care should be taken not to put all the eggs in one basket. We should invest our savings in different asset class viz. Equity, Debt, Real Estate, Metals- like Gold and Silver. At the same time we should hedge our risks by choosing right types of Insurance options for Life, Health and of Personal Accident.

It dismays thinking about millennial who often keep ‘savings and investments’ on a back-burner. They are found taking loans for all practical purposes, making foreign travel as an integral part of their base essentials, thoughtlessly spending to keep pace with the latest gadgets and fashion,  spending harrowing sum on lavish weddings.

We come across many young people who save only to fund their experiences and the thought of long-term financial planning doesn’t appeal to them.

We must understand the importance of saving money. It gives immense peace of mind, expands our options for decisions that have a major effect on the quality of life and on our financial goals, such as –meeting demands for children education, children marriage, buying house, facing challenging exigencies and eventually retire with peace of mind.

We are not saying to sacrifice prime days of life for smooth or early retirement. Here optimization would be the way to strike a balance. Be frugal; not extravagant, nor miser! We should design a financial plan, which ensures we are on track for tomorrow while still enjoying today.

We should take an honest look at our entire financial situation. We can never take a journey without knowing where we are starting from, and a journey to financial well-being is no different. We need to figure out on paper our current situation, what we own and what we owe. We should be creating a ‘Net worth statement’ accounting for our assets and the liabilities.

The next step is to keep track of our monthly income and expenses. One thing is certain that our Income should be far higher than our expenses.

Include a category for savings and investing. What are we paying our-self every month? Many people get into the habit of saving and investing by following this advice: always pay yourself first by allowing your bank to automatically remove money from your paycheck and deposit it into a savings or investment account.

Most people, who are wealthy, got there through a combination of their hard work, smart savings and wise investment decisions.

Be a habitual Money Saver:

• Make saving as your first expense.
• Stay Debt Free: Say goodbye to debt and EMIs.
• Cut down on non-essential purchases: Even evaluate what you are spending at the grocery stores.
• Avoid automatic subscriptions and memberships: Which you don’t use on the regular basis OR consider membership sharing with some family or friends. Many streaming services, like Netflix, let you watch your favorite shows from two or more screens.
• Reduce energy consumption: Installing dimmer switches and LED light bulbs, switch the lights off a place where you are not present, buy energy efficient appliances. Do not use large vessels to heat small quantity, thus reducing gas consumption. Drive vehicles at optimum speed to burn less gasoline.
• Pack lunch and eat dinner at home.
• Ask about discounts (and pay through credit card): You never know until you ask. Next time you’re getting tickets at a movie theater, museum or sporting event, check to see if they carry any special discounts for seniors, students, teacher, on your credit cards. Pay through credit card, as you get interest free credit period till your payment due date and even earn reward points. However, ensure you clear credit card dues on time to avoid attracting huge penalties.
• Lower your phone bill.
• Negotiate, negotiate, and negotiate on everything you buy: Just about everything is negotiable to an unthinkable level; learn the art of negotiation. Search the product you wish to buy in various shops to get that at good discounted rate.
• Sell unwanted items: that do not bring you joy and have not been in use.  

So, Earn as much as you can, Save as much as you can, Invest as much as you can.

Work for money and make money work for you.