How Timely Savings Can Help You Achieve Your Goals
Ever since you were a child, you must have seen your parents worry about the monthly budget and talk about savings. Up to your early 20s, your financial goals might only revolve around yourself and your parents, with your monthly salary being able to fulfil all of them. But once you enter the later stages of adulthood, your responsibilities might increase and spending your money in vain might not be an option anymore. It is the stage where savings need to become a core part of your life if you want to fulfil milestones that need higher financing.
Without savings, you run the risk of making unnecessary purchases and draining your financial resources, which can affect your quality of life in the long run. Read on to find out why timely savings are a must.
How does saving money benefit you?
Saving money is the cornerstone of a stress-free life. The golden rule of saving is to spend less than you earn and make savings a monthly habit. Disciplined and regular savings help you build a sufficient reserve to tackle any emergency. Because of the unpredictable nature of life, unfortunate events can happen in a split second, most of which require ample finances to get through. For instance, accidents and disabilities arising out of them strain a family’s present funds due to the cost of quality healthcare and support towards recovery. However, saving money is reserved for tough times and to fulfil the celebratory milestones of life such as following your passion, enrolling for higher education, going for a family vacation, and so on.
Why is it important to set goals when saving?
Sometimes you do not realize you are spending on unnecessary things because you do not have any goals charted for the future. When you don’t have a purpose for saving money, aimless spending can seem like a harmless act. That is why setting some actionable and realistic goals is very crucial. Most financial advisors suggest following the SMART approach to savings, where each goal should be specific, measurable, achievable, relevant and timely. It is okay to have a vague idea of your financial goals, but it is not okay to continue living that way. If you lack ideas, the simplest way of setting some goals is to write down what you want from life. Goals can be short-term, mid-term, and long-term and vary from person to person. They can include any of the following or more:
Pursuing your dream degree
Getting a car/ bike
Starting a business
Buying your dream house
Funding your child’s marriage
Embarking on a trip or pilgrimage
Saving for your retirement
Paying off any debts or loans
Paying off healthcare expenses
Once you have a brief idea of your goals, you can set aside a portion of your income towards fulfilling them and use the rest for day-to-day household expenses.
How do you achieve a savings goal?
The first step towards cultivating a savings habit is to figure out how much you can set aside from your earnings. Once you do that, the question of where to park your savings arises. The traditional way of saving money is to open a savings account and have your bank deduct a fixed portion from your income every month.
In this way, you might succeed in cultivating a healthy savings habit but will end up generating relatively lower returns. This means your money will not grow over time and lessen in value due to inflation.
To profit from your savings, you need to put the amount into lucrative investment avenues. Investing is the only way to increase your wealth and keep up with the current value of the rupee. Investment avenues are broadly split into two categories – market-linked and non-linked.
The market-linked avenues consist of equity, debt, and other instruments that promise non-guaranteed1 but relatively high returns. Non-linked instruments give guaranteed1 but mid-level to low returns. Both kinds of investments are essential in an investment portfolio.
However, a guaranteed1 savings plan is the way to achieve your goals on time without any risk of loss whatsoever.
How can a savings plan help you in the future?
A savings plan is one of the numerous savings schemes available for goal-oriented savings and wealth creation. It serves as a wealth-creating and money-saving plan at the same time by offering a safe place to park a portion of your income and grow it over a term of 10 to 40 years.
Under a savings plan, you have to pay a fixed percentage of premiums over a fixed term in exchange for a guaranteed1 compounded payout at the end of the plan. Moreover, the best savings plan comes with inbuilt life insurance protection so that your loved ones remain secured even in your absence.
Life insurance ensures your family receives a guaranteed1 death benefit in the event of your unfortunate demise. The dual advantage of a savings plan makes it an ideal investment promising both increased returns and insurance protection.
Along with the base elements of savings and life insurance, you can avail of additional benefits such as extra riders# for protection against unforeseen events and the option to take a loan against your savings plan in an emergency.
Consistency is the key to achieving any goal. When it comes to your financial goals too, a mix of consistent savings and investing can bring about true financial success and help you live the life you deserve.