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How to Save Money for Future?


Saving money should be a regular habit, and no matter the amount of your monthly income, it is necessary to set aside at least a fraction of that income for your savings. Saving money can be a little difficult when there are too many basic and essential needs to be met; however, even with a small start, one can slowly increase the amount they save.

Savings are mainly important because all our financial goals, be it in the immediate future or years later, cannot be met without adequate planning. Even if certain goals need to be met in less than a year, a regular savings habit over the next few months can prove to be useful.

To know how to save money and reach your savings target, you can also make use of a savings calculator that helps you save time understanding the amount you need to save over your savings tenure.

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Importance of Saving Money
 

It is necessary to save money before you start spending your income on your essential needs; that way, you can set aside the desired funds that you want to save over a period of time. Furthermore, saving money is necessary so that you can fulfil not only your short-term and long-term goals but also create an emergency fund for future use.
 

For instance, in case the only earning member in a family happens to lose their job and cannot immediately find a new source of income, the emergency fund can help them, and their family can sustain their livelihood over the next few months. Keeping that in mind, always ensure that the emergency fund is adequate enough to meet your financial needs for at least 6 months, if not more.
 

Additionally, loss of income is not the only emergency one may face. Medical emergencies, such as critical illnesses, not only take a toll on one’s mental and physical health, but the road to complete recovery can be quite long. During such a time, the savings fund will manage the medical and post-recovery expenses of the patient as well as the essential needs of their family. 

Medical Emergencies

Save Money for Medical Emergency

Medical Emergencies

A medical contingency such as a critical illness or even an accident can be quite expensive. This not only includes the cost of having the injury or illness taken care of but also the post-hospitalisation care and medication over the next few months. Therefore, saving money for such emergencies is necessary.

Loss of Income

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Loss of Income

A severe illness, injury or even the loss of one’s source of income means that the family will endure financial troubles. Hence, it is important to have some savings at hand, which can be liquidated when the need arises. Such savings should suffice until you find a regular source of income.

Future Goals

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Future Goals

Everyone saves money for their future goals since it can be difficult to fulfil these financial obligations at a moment’s notice. A new start-up, your child’s further education or their wedding are some of the expenses for which you need to have saved enough money for 10-15 years in advance.

Extensive Renovations

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Extensive Renovations

Be it a house or a car, it is important to maintain it on a regular basis. While most of this maintenance can be handled with your monthly income, every once in a while, a complete overhaul can be much costlier. Your savings can help you cover these costs without affecting your essential expenses.

Build a Retirement Fund

Picture Of Retirement Fund

Build a Retirement Fund

The golden years of one’s life can be wonderful if one’s finances are in place. Post-retirement expenses can be quite different from regular expenses, especially when it comes to health check-ups and medications. Therefore, start saving money well in advance for your retirement years.

Create an Investment Fund

Picture Of Investment Fund

Create an Investment Fund

Irrespective of one’s profession, investing some of your money should be part of your financial plan. However, ensure that this money does come from your daily budget. This is why you must set aside some savings so that you can utilise them for making various suitable investments from time to time.

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How to Save Money?

It is easy to save money if you have a disciplined approach to managing your finances. It does not always mean that you need to put aside all your money as savings and cut down on your necessities; however, it is crucial to keep track of your expenditures and ensure that you understand how many years of saving money can help you reach your goals. Here are some money-saving habits that you can apply:

  • Money bag - Claim tax deductions as per applicable tax laws with Term Insurance Policy - Features of Tata AIA Term Insurance Policy
    Pay off your debts

    It may be necessary to take loans for different purposes but be sure to pay them off on time so that the debt does not earn bad credit. This not only lowers your chances of getting important and essential loans in the future but also affects your savings since you will need to keep dipping into your emergency funds to pay off late fees and penalties. As far as possible, don’t take a huge loan that can be difficult to repay as it garners interest over the years.

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    Create a Savings Plan

    Buy a savings plan, explore different options to save money for different goals and approach your savings in a disciplined manner. If possible, save more in long-term instruments and do not access these funds until it is time to fulfil those obligations. Set aside less money for short-term, liquid instruments. This way, you can save more and still meet your short-term and long-term goals without affecting your daily household and necessary expenses.

  • Boy with a cap
    Diversify Savings Options

    If you have a savings bank account, it may not be enough to save money. Therefore, it is always advisable to explore more options for saving money and growing your money over the years. A savings insurance plan, for example, gives you the dual benefit of long-term savings and life insurance. Therefore, instead of opting only for a single method to save money, opt for instruments where your savings will accumulate interest or offer better benefits in the future.

  • Flexible Death benefit payout in a term plan can be offered either as a lump sum, a regular income or a combination of both
    Spend Wisely on Luxury

    Be it a family vacation or a luxury car, make wise choices when purchasing luxury items. While saving money does not mean holding back on your wishes, ensure that you plan the trip or the new purchase such that you do not end up spending beyond your means. Expenditure on luxuries and entertainment should be kept to a minimum if you want to save money and should also not affect your essential expenses. So, plan carefully and prioritise your luxury purchases.

Know more about our best selling Guaranteed* Returns Plan – Tata AIA
Life Insurance Fortune Guarantee Plus (UIN:110N158V06)

Non-Linked, Non-Participating, Individual Life Insurance Savings Plan (UIN:110N158V06)
 

TATA AIA Life Insurance

Fortune Guarantee Plus

Key Features:

  • Get guaranteed* tax free^ returns

  • Health Cover against 40 critical illnesses$

  • Save tax^ up to 46,800** 

  • Avail free online medical consultation^^

  • Get your premiums+ back at the end of the income period.




Types of Investments for Your Savings
 

Though investments and savings are two different terms and are often confused with one another, a lot of investment options double as savings options as well. These savings plans and schemes can be especially useful when you are trying to save money without disrupting the funds by means of frequent withdrawals.

When it comes to savings, it is always more apt to select long-term savings options that allow you to accumulate a sizeable fund for meeting your obligations. These are some of the types of investments for saving money:

Guaranteed Return Savings Plans

Life Insurance, especially savings plans such as endowment plans or money-back plans, are a good way to save money for the long term. In the case of endowment plans, you can receive the monetary benefits as a lump sum at the end of the policy term, while in the case of a money-back plan, you can have payouts at regular intervals during the policy tenure and also maturity benefits at the end of the policy term.
 

Life insurance savings plans are also popular because the policyholder can avail of life cover protection and savings under a single policy. Moreover, by paying the policy premiums each month, year or quarter, one can ensure disciplined and regular savings in the policy.

National Savings Certificate

The National Savings Certificate or NSC is a fixed income saving investment plan through which you can accumulate your savings over a period of 5 years. Though this is one of the few short-term savings plans, saving money steadily over 5 years can help your money grow. Additionally, an interest rate of 6.8% on your savings each year helps increase your savings corpus.
 

Many opt for the National Savings Certificate as the minimum amount you can save each month is as low as ₹1000, while there is no upper limit.
 

It is also easy to open an NSC account at your nearest post office, as long as you meet the necessary eligibility criteria. Since the scheme was initiated and is backed by the government, it is a popular savings scheme for low-risk investors and offers tax benefits under Section 80C of the Income Tax Act.

Recurring Deposits

Investing in a Recurring Deposit (RD) is a suitable way to save money over a savings tenure of your choice. Hence, you can choose a savings tenure as low as 1-3 years if you need to meet some short-term goals. RDs are also quite flexible when it comes to the amount you want to save and the frequency of the deposits. At the end of the savings tenure, you can receive the lumpsum amount saved along with the applicable rate of interest.
 

It is essential to note that you cannot withdraw funds prematurely from a Recurring Deposit before the end of the tenure. This results in a penalty that is levied by the bank or the financial institution where the Recurring Deposit is present. In addition, for investors who are senior citizens, the rate of interest on RDs is higher than that for younger citizens.

Senior Citizen Savings Scheme (SCSS)

The SCSS is a saving investment plan that helps senior citizens enjoy the benefits of greater security in savings and a steady income during retirement. One can easily have an SCSS account by visiting their bank, financial institution or the nearest post office. Once you are 60 years of age, you are eligible to open an SCSS account. Otherwise, if you have opted for superannuation or the Voluntary Retirement Scheme (VRS), you can open an account between 55 years to 60 years of age.
 

Once you attain superannuation, ensure that you open the Senior Citizen Savings Scheme account within one month and start saving with an interest rate of 7.4% per annum. This scheme is also useful for saving on taxes as you can claim tax deductions of up to Rs 1.5 Lakh under Section 80C of the Indian Income Tax, 1961.

Post Office Monthly Income Scheme

Post Office Monthly Income Scheme (POMIS) is a savings-cum-investment scheme with low-to-moderate risk. However, it is quite popular as a regular income savings scheme and offers fixed returns on investment. Investors can invest a minimum of ₹1,500 in the scheme, while the maximum amount is ₹4.5 Lakh. This money-saving scheme also allows 3 investors to open a single joint account, or an adult account holder can open an account in the name of a minor.
 

The POMIS allows investors to make fund withdrawals at any time as per their needs and make fresh investments under the same scheme after the maturity period is over. However, only Indian citizens can open a POMIS account, and each individual may not have more than a single account.

Public Provident Funds (PPF)

Public Provident Fund (PPF) is another money-saving scheme that is supported by the government. This makes it one of the most secure savings options for long-term savings. The minimum amount one can deposit in a PPF account is ₹500, while the maximum is ₹1.5 Lakh in a given financial year. Moreover, the PPF enables investors to take a loan against the savings between the 3rd and the 6th year.
 

Additionally, if you want to make partial withdrawals from your savings, you can do so, starting from the 7th year. The PPF account will mature at the end of 15 years, after which you can choose to extend the savings plan for another period of 5 years. During this extension, it is not compulsory to continue investing money; the saved funds will garner compound interest as per the prevailing rates. Like other savings plans, PPF is also eligible for tax benefits under Section 80C of the Income Tax Act.

Conclusion
 

There are various avenues available for saving your money for future use. However, the most important point to remember while saving money is that long-term savings should be preferred so that you do not need to dip into your savings from time to time. Moreover, while most savings plans and schemes are low-risk and suitable for all, it is always recommended that you select a savings plan or scheme that helps you reach your financial goals in an ideal way!

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Frequently Asked Questions 

How much should I save each year?

How much money you need to save in a year will depend on your future goals. For example, if you want to save ₹5 Lakh in the next 10 years, you should aim to save ₹50,000 every year. You can choose savings insurance plans or a savings scheme that will enable you to save this amount each year. If you are seeking to save a larger amount of money, you will also need to increase the amount to be saved each year.
 

A savings calculator can be useful in deciding how much money needs to be saved each year. Then, you can further divide that amount into monthly savings so that you not only save regularly but can put aside a dedicated amount each month without affecting your other expenses.

How much savings do I need to have?

The savings you should have at all times should be such that they can be liquidated, and you can meet your urgent financial needs with the funds. Such an emergency fund should have an adequate amount of money to last for at least 6 months so that in case of an emergency, until you find another steady source of income, you and your family can sustain their livelihood for the time being.
 

There are several long-term savings plans and schemes that allow you to make partial withdrawals in times of need. You can select from such savings options and also keep some savings ready at hand for a rainy day. However, it is important that you do not use these savings for your daily needs.

Does a savings plan help meet one’s financial goals?

A savings plan is one of the many ways in which one can meet their financial goals. Many people use a savings insurance plan to gain from the dual benefit of savings and life cover under the same policy. If you choose a savings policy coverage that will help you fulfil your future goals and also protect your family, such an insurance policy can be an important part of your financial planning.
 

Since there are different types of savings plans, such as endowment plans and money-back plans, you can choose how you want to receive your financial benefits and meet your obligations. Savings plans also offer regular income, which can be useful for meeting monthly expenses, especially when you are retired and do not earn a monthly salary.

What is a savings calculator?

A savings calculator is a free-of-cost and easy-to-use online tool that can easily at any time and from anywhere. This calculator is used to help you understand the amount of money you need to save to meet a savings target over a given time period. For example, if you need to meet a savings goal of ₹10 Lakh, the calculator will show you how much money you need to save each month or year for the next 5-10 years to reach ₹10 Lakh.
 

When using a savings calculator, also take into consideration the rate of inflation during your savings tenure so that you can account for any gaps in your savings. 

Will a savings calculator help save more money?

A savings calculator may not help you save more money; however, without a savings calculator, it can be difficult to estimate how much you need to save over the years to meet your financial obligations. As a result of this, you may not be aware of how much you should be saving and instead, other expenses may affect your existing savings.
 

To ensure that you have a clear idea of what your savings goals are and how much money you will need to save, it is necessary to use a savings calculator. With better financial planning, you may be able to save more over the years.

Is it important to have a budget while saving money?

Yes, making a budget helps you control your spending and save more money. Once you create a budget in your financial planning, you can prioritise your expenses and also avoid a few that are unnecessary. After you receive your monthly income or salary, divide your income such that the money to be saved should not be spent on essential or luxury needs.
 

With a concrete budget, it becomes easier to save money for different purposes and goals as you are already aware of what your existing expenses are. Hence, a budget savings plan is an important part of creating a long-term savings plan.

What savings plans should one opt for?

There are many traditional as well as non-conventional savings options that you can choose from, depending on your needs. Savings accounts, fixed deposits, recurring deposits, etc., are some of the traditional saving options. Or you can go for a savings insurance plan if you need life insurance coverage while creating a long-term savings plan. Tata AIA Life Insurance offers different savings plans to help policyholders meet their financial goals.
 

If needed, you can choose a variety of savings options and save some amount of money in each to ensure that all your long-term, short-term and immediate financial goals can be met.

Disclaimer

  • *"Guaranteed Annual Income” shall be a fixed percentage of the Annualised Premium / Single Premium (excluding discount) payable in a year. Guaranteed Annual Income as per the chosen Income Frequency shall commence after maturity till the end of the Income Period, irrespective of survival of the life insured(s) during the Income Period.
  • $Available under Regular Income with an Inbuilt Critical Illness Benefit option
  • **Tax benefits of up to ₹46,800 u/s 80C is calculated at highest tax slab rate of 31.20% (including cess excluding surcharge) on life insurance premium paid of ₹1,50,000. Tax benefits under the policy are subject to conditions laid under Section 80C, 80D,10(10D), 115BAC and other applicable provisions of the Income Tax Act,1961. Good and Service tax and Cess, if any will be charged extra as per prevailing rates. The Tax Free income is subject to conditions specified under section 10(10D) and other applicable provisions of the Income Tax Act,1961. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on above.
  • ^Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere on this site. Please consult your own tax consultant to know the tax benefits available to you.
  • ^^Medical Consultation is available under eligible policies of Tata AIA Life Insurance and these services are currently being provided by Practo. Medical Consultation feature is optional. It is the customer’s sole discretion to avail Medical Consultation and to follow the advice suggested by the service provider. All medical-related dealing will be directly with the service provider and not with Tata AIA Life Insurance. It is available only for Life Assured of active policies for select products/riders. This feature can be discontinued or service provider may be changed at any time at Tata AIA Life Insurance’s discretion. This feature is provided by a third party service provider and Tata AIA Life Insurance shall not be liable for any liability arising due to customer opting to avail this feature.
  • +Return of Premium Benefit is The Total Premiums Paid (excluding loading for modal premiums and discount) by the policyholder will be payable at the end of the Income Period, irrespective of survival of the life insured(s) during the Income Period.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd. The plans are not a guaranteed issuance plan and it will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • Insurance cover is available under the products.
  • Please know the associated risks and the applicable charges, from your insurance agent or the Intermediary or policy document issued by the insurance company.
  • Risk cover commences along with policy commencement for all lives, including minor lives.
  • Buying a Life Insurance Policy is a long-term commitment. An early termination of the Policy usually involves high costs and the Surrender Value payable may be less than the all the Premiums Paid.
  • In case of non-standard lives and on submission of non-standard age proof, extra premiums will be charged as per our underwriting guidelines.
  • All Premiums and interest payable under the policy are exclusive of the taxes, rider premiums, underwriting extra premiums, loading for modal premiums, if any which will be entirely borne/ paid by the Policyholder, in addition to the payment of such Premium or interest. Tata AIA Life shall have the right to claim, deduct, adjust and recover the amount of any applicable tax or imposition, levied by any statutory or administrative body, from the benefits payable under the Policy.
  • L&C/Advt/2022/Sep/2266