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Why Should You Have a Monthly Savings Plan? How to Create It?

April 21, 2023

Table of Contents

    Table of Contents

      Here is the quick guide on the "Future Value of Monthly Savings" and know Why to Save Money?, How to Save Money? and The magic of Early Savings.

      Saving money is like planting a sapling - it might seem like a tedious albeit boring thing to water and take care of it for weeks, but slowly you’ll see that it blossoms into a beautiful plant. This plant not only beautifies your home but is a true testament to how consistency and patience can bear pleasant results in the future. The art of monthly savings is quite along the same lines.

      When you save money, you provide yourself a ground of financial stability and independence, as well as protection in the event of a financial crisis. Even a meager sum of Rs. 1000 saved per month can accumulate into 12k/year, and that’s a relatively big amount that you can invest in a SIP and bear handsome returns in the next 3 years!

      However, despite recognizing the value of saving, most of us tend to spiral in the world of impulse buys and often lose track of our expenses, spending more in the present and saving little for the future.

      So, how do you go about saving, how much to save, and most importantly, why should you begin this exercise right now? We’ll uncover all these aspects, and hopefully, by the end of this blog, you’ll be ready to commit to some serious savings in life! 

      Why should you start saving?

      While there are many ways we can answer this question, it all predominantly falls under the below thought -

      “When you save money in the present, your money will save you in the future.”

      And while savings are essential for everyone, regardless of income, consumption, or life stage, here’s a lowdown on the impact savings can have on your life.

      It instills peace of mind 

      When you know you have a certain amount saved up for times of need can make all the difference in calming your nerves if a financial crisis hits. You may live a stress-free life knowing that you will not have to suffer if things go unexpectedly wrong.

      It provides you with a brighter future 

      Savings can help you achieve a variety of objectives. You can buy a house, save for retirement, or buy a car. You may plan for your future, enjoy the most of what life has to offer and live a very fulfilling existence.

      It covers your children’s education and your goals

      You can fund your children’s goals and send them to the greatest schools and institutions in the world if you have a sizable savings account. You can also cover your own personal goals with a decent amount of savings to fall back on when required.

      You may set short-term goals 

      Savings aren’t solely for the long term. You can also benefit from short-term savings. Many individuals save for a few months before embarking on a trip, and you could do that too. Other short-term goals can also be purchasing a particular appliance, saving for rent, and so much more. 

      It provides your family with security 

      You may ensure that your family is well-provided for by saving in a disciplined manner. In bad times, your savings might function as a cushion for your loved ones, assisting them in overcoming any financial difficulties.

      Now, saving money doesn’t necessarily imply that you cut away all the pleasures of your life to chunk up all the money for the future. Because not only is this potentially problematic, but it’ll also make your life quite dull if you continue dreaming about what will happen while compromising on what can happen.  

      Think about it like this - if you replace your weekly swiggy orders of Rs.400/average and cook one gourmet dish at home on the weekend with items you can find at the next grocery shop, you’re potentially saving a good amount of Rs.1,600/month!

      The idea is to find an alternative way that allows you to take a dig at saving while leading a pleasant lifestyle. 

      How do you save money?

      Not everyone is a foodie, and while the above example might not resonate with everybody, we recommend you follow the below tips that are practical enough to save money every month. Following even some (if not all) can help you grow your savings fortune in no time. 

      Keep expenses tracked

      The first step in saving money is raising awareness. Realizing how much you spend on a regular basis will inform you of things like:

      • Things you should avoid purchasing
      • How much do you spend on expenses?
      • The amount of money you may save in a month or year

      So, let’s start with a basic assignment that will give you an indication of how much your every day, monthly, and annual spending are. This will take up only a small portion of your time throughout the day.

      Make a budget

      Once you decide on your monthly spending, you may create a budget for the entire month. It’ll save you from going overboard with your spending. Similarly, you will be able to save a set amount of money at the start of each month while still meeting all of your basics and occasional wants.

      Understand your priorities

      To effectively keep to your budget and guarantee that your funds are not depleted, you should examine your priorities. The priorities ought to be the ones on which you absolutely need to spend your money. If it sits at the last of your to-do list or not at all, we suggest you should put it off until you have additional money to pay for it.

      This is where the notion of requirements and luxury desires comes into play.

      Set a goal for your savings

      Practically speaking, saving money isn’t motivating if you don’t know where you’ll put it. Although an emergency savings fund is the safest route, setting goals is a far better one.

      We’re talking about creating objectives in terms of both the quantity and the precise purpose. You will be more motivated to save money if you have something more to look forward to.

      There is no real target savings amount. That’s because this should be determined by what you want to accomplish with your money as well as how much you could save based on your wages and costs. Nonetheless, the work will be an amazing addition to your savings regularly.

      Have the right attitude

      The right mindset plays an important role when it comes to accomplishing a goal that’s pure-play financial. To be totally involved in cultivating a healthy habit of savings, you must be completely dedicated and committed to achieving your objectives.

      Another attitude that you should adopt is one of financial control. Spend just what you can afford to lose, even if it seems like a broken record. Don’t compromise your long-term aspirations for the sake of short-term satisfaction. Having this in mind will assist you in improving your behavior towards your finance and will result in a good financial graph.

      The magic of saving early in life

      Your 20s are the most brilliant years of your life - this is the time when you’re thriving, experimenting with your career, making new mistakes and choices every step of your way. Add to this the fact that if you start saving in your 20s, you’ll practically have a fortune that you can lay back on by the time you’re 60! That’s correct, and here’s how - 

      If you put Rs. 5000 aside today with a 6% average annual return compounded monthly and maintained by making the same commitment each month for the following 40 years, you’d end up with Rs. 93,37,146.53 assuming the same 6% annual rate of return. And that’s a lot!

      You can gain this and many other opportunities to profit from compound growth, which is akin to compound interest. Compound interest is effectively interest on interest — you get on both your first and subsequent investment contributions, as well as on the interest that has accrued over time. This allows you a greater amount on which to earn future interest, resulting in even higher profits.

      Overall, compound growth is the primary distinction between putting your money through some kind of financial scheme bucket or storing it in a shoebox beneath your bed. It’s what may help your money to grow - in some circumstances, considerably beyond the initial investment.

      Trying to save money might seem pointless when you consider how little money you can save by reducing your weekly expenditure by a few dollars here and there. But, if you choose to invest these spare changes in your funds prudently, the money you saved by cutting expenses will end up being worth lakhs of rupees in the long term. 

      It’s possible to achieve even greater savings by cutting other ongoing costs that are sometimes mistakenly assumed to be “fixed,” and these monthly savings examples can help you achieve just that. 

      Using a cashback card

      Increase your credit card advantages by charging as many ordinary costs as possible to a credit card that gives high cashback rewards: groceries, petrol, utilities, restaurants, and everything else you can think of. However, make sure you pay up your credit card account at the end of the month. Paying the interest on a debt will likely wipe away any incentives you might have received.

      Spend during holiday period

      If you’re able and willing to wait for holiday sales and clearing on large purchases, you can save a lot of money. These best periods can be divided into two types.

      The first are big holidays, which are nearly always used as a pretext for shops to host “sales events” of some type. The finest example is the end-of-year season, which begins with Diwali sales and goes on till the New Year. 

      When carefully studied, Diwali purchases may frequently be the greatest of the year sale, particularly in technological areas like TVs and laptops. Furniture on Republic Day sales, appliances on Diwali, and yearly sales of Flipkart and Amazon are among the categories during which your purchase plans can bank out to max out on savings. 

      Track and save money

      There’s been a surge in finance apps that has made personal finance a relatively easy concept to grasp for the masses. One such app that can decode your entire expense cycle easier is Jar. Tune into the auto-invest feature and save the spare change every time you make a transaction. 

      What’s cool? You get to invest this money in digital gold and even acquire physical gold for the investment you make. The best part - this is just one of their offerings; read this blog to know more about other investment options you can make through the app. 

      To conclude:

      Saving money is essential to your well-being. You may also rely on savings to protect your family’s requirements and provide financial stability in times of crisis. However, it’s crucial to discover a way to expand your savings.

      Keep trying out these methods and ensure you’re consistent with your savings. It’ll make a big difference and help you achieve all your goals in the long run.