Celebrating the ‘International Savings Day’ today, here are few savings tips you can take to protect yourself against uncertain times.
New Delhi: On October 31, we celebrate ‘International World Savings Day’ every year to remind us the importance of savings in our lives. However, in India, we celebrate on October 30. This year we’re celebrating the day with the theme ‘Saving prepares you for the future’, underlining the uncertain time around the globe.
Celebrating the International Savings Day today, here are few savings tips you can take for a better and secure future.
1. Keep track of your spending
It’s important that you know where your money is going so you will take requisite steps to check the reckless spending.
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2. Remember rule of 72
You may have heard about it. The rule comes into play when you want to know the number of years to double your money. The rule is simple, just divide 72 by the annual rate of interest and you will get the number of years in which your money will double at that rate. For example, say if you are getting an ROI of 8 per cent, then divide 72 by 8 and you will get 9. This means your investment will double in 9 years.
3. Keep in mind 50-30-20 Rule
This rule helps you control your spending, plan your budget and manage finance effectively. The rule says 50 per cent of your salary/income should be set aside for meeting necessities like rent, groceries, bill payments and EMIs if any. 30 per cent of your salary should be dedicated to wants and desires like entertainment, vacations etc and 20 per cent should be invested in various instruments to build a huge corpus over a long tenure.
4. Limit EMI Rule
You should never let your monthly EMIs cross 40 per cent of your monthly earnings. Say if you earn Rs 40,000 per month, then your all EMIs should not exceed Rs 16,000 per month. This is also important because lenders often see your ongoing EMIs when you apply for a loan.
5. Invest in FDs, Mutual Funds, & Equities
Inflation is a termite that erodes the value of your savings each year if you don’t put in use. Fixed Deposits (FDs), Mutual Funds, and Equities ensure that your money will make enough to beat Inflation. However, Mutual funds and Equities are risky and it’s better to consult experts before putting money into them.
6. Eliminate reckless spending and create different Income Sources
Don’t rely on a single source of income. You should look for creating additional sources of income to help you prepare for exigencies. While investing is one of the methods that generate additional income for you over time, you can explore some part-time work but be mindful that it should not violate the legal contract that you may have signed with your present employer.
7. Be a Miser
Spend only on things that you really need. When you have money in your pockets, the lures of market force you to loosen the strings of your purse easily. Hence, it’s important to keep the things you need while going to shopping. It will help you avoid reckless spending.
