What is Saving?
Savings include the money that is left after one deducts their expenditures from their income.
To put it simply,
Savings = Income – Expenditure.
Saving money is the first step towards financial security. When someone saves money, they can use it to –
1. Protect themselves from emergencies;
2. Build a corpus of funds for retirement; or
3. Invest and make it grow more.
How to start Saving?
Savings are usually maintained with the usage of bank facilities like savings accounts and fixed deposits.
Apart from these, one can choose from a variety of periodical yearly and monthly savings plans like –
1. Post Office Monthly Income Schemes (MIS)
3. Sukanya Samriddhi Yojana (SSY)
However, sometimes it can be hard to save money due to an influx of expenses that go unrecorded.
Therefore, one needs to set out a clear strategy to save regularly and efficiently.
The best way to do so is to start budgeting.
A budget is a plan-of-action that lays down income allocations towards various expenses and helps us limit our spending on unnecessary expenses.
If one is unsure about the limits we should be setting upon our spending and savings, we can use thumb rules like the 50-30-20 rule to start budgeting.
Later, this rule can be tweaked as per one’s needs and goals.