You might wonder how to begin saving if your income is
already over-committed. Efficiency and discipline are the answers.
- You
need to first find out where your income is going. Maintain a diary for the
month, noting down everything you spend on, to the last paisa. You will be
surprised at the amount of random purchases you make – from coffee breaks
to grocery bills. These are the best places to start trimming.
- Then, make a budget. This isn’t as difficult as you think. All a budget does is create a plan for spending, by stating expenses and goals. Make sure to cover fixed and regular expenses such as mortgage or rent, utility payments, and car or loan/credit card payments. Then set limits on necessities like groceries and clothing, as well as nice-to-haves like entertainment and travel. It’s also important at this stage to factor in a savings amount.
- Now,
your first priority is an emergency fund, if you don’t already have one in
place. And the easiest way to do this is to have the amount deducted from
your salary every month and put into a Fixed or Recurring Deposit. Give
yourself a pat on the back if you find yourself adding that little extra
to your fund because you managed to save a little more this month. You
might find it easier to stay within budget if you use cash or debit cards
for the necessities and frills.
- As your emergency fund accumulates, your next task is to find more money for savings and even investment. Begin by paying off your credit cards. If you spend a little time examining your monthly statements, you will be amazed to see how much money you’re losing just by way of interest!
SAVING Vs. INVESTING
At this point, we need to address the differences between
saving and investing.
Savings provide for emergencies and fund specific purchases
in the near future (within two years). The primary goal is to store funds and
keep them safe. However, you invest to increase net worth and work toward
long-term goals. Also realise that investing involves risk, where you could
lose some of your original investment. Only consider an investment plan when
you have in place an emergency fund, insurance, control over credit use, and a
retirement plan.
IN THE LONG RUN
Now, consider making a long-range savings and investment
plan. When beginning to plan for investments, consider your goals, the amount
of time you will be able to spend on nurturing these investments, how much you
know about the funds, how much money you have to invest, whether you can
tolerate risk, and handle loss. Remember that your ultimate goal is a
financially secure future for you and your family.
If you look back over all that we’ve discussed so far, you
will realize that we’ve told you how to begin saving money, in small,
manageable chunks. The final objective might be to set aside enough for you to
retire so that you don’t have to work another day, but your immediate goal is
to start the process and become habituated, so that saving becomes a way of
life, and a chance to improve how you live.
By reading this on paper it seems easy to start it but the fact is it's not easy. But friends its not impossible....also it is necessary in this world of today where difficulties (specially financial) are on the every next step.So start saving for your great future.....
Happy Savings!!!!
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