Money has diverse roles to plays in all our lives. From meeting our daily requirements to helping us fulfill our life’s goals in the future, the value of money cannot be undermined. In today’s unstable economic conditions, it is important to be prudent and invest for a steady future ahead. And saving your hard earned money is the first step towards this goal. This assures us safety of future cash, and helps us to meet unexpected financial emergencies.
Where saving means setting aside a certain amount of money for a purpose, investment results in wealth building and yields returns on your savings. Here are a few practical tips to start saving now and invest for a steady future ahead.
1) Define Your Goals
We all have goals, whether it is to buy a car, or funding our child’s higher education. Define your goals well. This gives you a clear picture of what you need to save towards. The more your goals the more you need to save and invest, so that your hard earned money would reap benefits at the right time.
2) Cut your Debt
Keeping your debt at low levels is an important step towards saving money. Where a home loan may prove advantageous as it works towards building an asset, what we are essentially talking about here are unsecured loans such as credit card dues and other personal loans. Unsecured loans carry a very high interest rate of around 30-40%. So reducing such debt could help you save money unquestionably. Credit cards do come with its share of convenience; however its usage must be done with diligence. Pay up all credit card dues well before due date. If you have personal loans, work towards repaying them at the earliest.
3) Have a Budget
Maintaining a monthly budget is a very important step to monitor your spending and your saving. A budget does not imply you need to curtail spending. It just helps you understand your spending pattern and plan your savings on a regular basis. Draw up a monthly plan of your necessary expenses such as children’s fees, household expenses, medical expenses etc… Set these essential expenses apart. Utilize the balance to save and invest.
4) Spending Wise
Apart from just creating a budget, the key to saving and successful investing also lies in spending your money wisely. Allocate your resources towards necessity expenses and towards savings and investments. Necessities come first and other non essential expenses take their turn second. Stay away from impulsive buying. Various sales and offers are often quite a treat, but hold on. You actually may not require them. Look for suitable bargains when the necessity arises to buy a particular item.
After having listed your goals and needs, it is important to prioritize them. What’s your immediate needs and what requires to be met 20 years hence? Prioritizing them helps to streamline savings and effectively channelize them towards investing. For example saving regularly in a long term plan may cater to a long term goal such as children’s education. For short term goals of buying a car or towards holiday expenses, a bank fixed deposit may prove advantageous. So prioritize to effectively manage money
6) Educate yourself
It is never too late to educate yourself on matters of personal finance. Be aware of all the options available to save and invest. Numerous options from bank deposits to regular savings plans exist to suit different needs. So understand your profile and use the most appropriate option available for you.
7) Save for a contingency
Have a contingency fund in place that would meet emergency and unforeseen expenses such as a job loss or medical costs. Not having a contingency fund may derail your savings and investment plan towards long term financial goals. Besides, you may also end up using your credit card or opt for unsecured loans resulting in a high interest rate debt.