If you’ve always wanted to save more but have been unable to do so for various reasons, chances are that you’ve been approaching it in a less than ideal manner. Here are some tips that you can include in your day-to-day life that can completely transform your finances for the better. But before we take a look at the tips, let’s quickly take a look at why saving is important.
Why is saving important?
As an individual, you might have several goals in your life. For instance, if you’re a young working professional, your life goals might include purchasing a car or a home. Or if you’re married and have children, your life goals might include providing your children with the best education. Irrespective of the life stage that you’re currently in and the kind of life goal that you have, to be able to successfully satisfy them, you would need a large enough corpus.
And how do you build a large corpus that’s enough to satisfy your life goals? By the magic of saving, of course. There’s even an old English saying that goes ‘A penny saved is a penny earned.’ Saving your hard-earned money in a manner that’s systematic and well-thought-out can do wonders to your financial position. With that, let’s move on to the tips to help you save more.
Tips to help you save more towards your life goals
1. Draft a budget
Budgeting is a neat little trick that can help you maximize your savings. Listing down the various sources of income and expenditure out on a piece of paper will allow you to visualize the inflow and outflow of money. This can help put your finances in a better position by enabling you to plan your expenses accordingly.
2. Cut down on expenditure
Many individuals unknowingly spend more than what’s necessary, leading to their savings taking a hit in the process. The budgeting process above can help you outline your expenditures, which you can then use to filter out unnecessary expenses. So, the next time you feel the urge to splurge, think about how your life goals are important to you.
3. Purchase a term life insurance plan
You can redirect the money that you save by cutting down on unnecessary expenditure towards a term life insurance plan. It can help secure your family’s financial future and enable them to satisfy their life goals when you’re not around. If you purchase a term insurance plan early on in your life, your nominee can get the chosen death benefit sum assured on your death.
4. Have separate accounts
It is a good idea to have multiple banking accounts by your side instead of having your entire earnings under just one roof. You could have an account for servicing all your debt and loan obligations, an account for your general household expenses, and a third account for savings and investments. As soon as you receive your monthly income, demarcate it amongst these three accounts. This way, you can ensure that you save your income as soon as it sees the light.
5. Start early
This is one of the most underrated tip there is. Starting your savings journey at an early age, preferably as soon as you get your first job, can give you a huge head start. Even if starting early means that you can save only a few thousands, it would be a good idea to do it since it will all add up in the long run. The concept of compounding is extremely powerful and can help you build a large corpus with much less effort.
6. Invest your income
One of the preferred ways to save is to invest. The financial markets give you an opportunity to create market linked wealth in the long run. And investing in a ULIP policy is one of the preferred ways to participate in this process. Not to mention, it also provides you with a life cover. Alternatively, if you don’t prefer to invest in the stock markets, there are also many other types of life insurance policies like endowment policies that you can consider.
Implement these tips consistently and diligently and watch your savings corpus grow over time. That said, before you go ahead and purchase any one of the many types of life insurance policies, always ensure to use an insurance calculator. It can give you a better perspective of how life insurance can help you and your finances.