Saving money is an art and like skill, but there are some secrets which people don’t tell in public. And yes this is writing that saving money and investing money can make you financially free as well as you can also become rich.
Are you ready to know the secret?
Let I will tell you in brief all about this money management stuff let us first understand
The following valuable knowledge going to learn today:
- Saving Definition
- Benefits of Saving Money
- Importance of Saving
- Worksheet on Saving
- Where does your money really go?
- Difference between Saving money and Store Money.
So, read this carefully “Money only can be saved when your income is more than you pay off all your five buckets.” Yes this is the biggest secret I don’t know about the buckets I maintain below. As you read you can understand more in-depth and definitely know the secret of saving money and becoming rich.
You should have to pay your quarter part to yourself then only you can keep your body and mind peacefully which is our main purpose of life. And the remaining three quarters will automatically make you rich and financially free.
you have to enjoy your life fully with no foundation here I am not going to give you shit advice that cut off your expenses and save money compromise with your happiness and save money is bullshit advice.
So what do we have to do?
So take a little bit of time and think about what are the assessments from which I can save money. Make a list of everything related to money, current income, and expenses.
Observe that list and try to reduce your wasted money like bills, recharge Wi-Fi connections, etc. Try to do the same thing in less money find some alternate compare to the same comfort to save money
You have to take attention to your food, travel, cloth cost and try to reduce them as well be realistic with yourself just look at your lifestyle bypass all extra expenses.
Once you simplify yourself and set a target to save money by tracking money where it is going then yes you are going to win and achieve your dreams and become financially free.
Last step you have to live a balanced life you have to serve all parts of your life equally so there is simple math which I named bucket. You just pay attention to your income and expenses to save money.
And you such enjoy your life in a budget don’t make stupid things like taking a loan for travel and all these ideas are literally shit. instead, plan your event and save money.
Once you identify your income and budget plan your personal finance and then put some amount of money to invest and some amount of money for emergency funds don’t touch it any condition.
1) Saving money Definition:
Saving means you are financially on the safe side of others. It’s never mean to store money.
The save money means to keep your money aside from your income and deposit in a savings account, deposit account, investment funds like mutual funds, or liquid funds. If you store money for a long time the value of money decreases because of inflation.
Saving means you are living a great life. You earn more than you want and save some money, plan some events or trips for yourself or you can buy something.
Valuable only by tracking your money finding some same value-able thing at low cost.
Also read- Mortage
2) Benefits of Saving Money
people save money due to these two reasons and they look to benefit from these reasons.
1) Short term savings benefit,
Some people save money to avoid their uncertain financial events in their life and they use that money instead of not affecting their bills which is what they pay with their income.
As an example, you are working hard and putting your only 10 rupees daily into a savings box which is at your home. After one year you have 3,600 rupees. You think that I save money for my emergency or some other small expenses.
if you put this money to the bank you got an interest of 7% and the money will be around 3800 rupees so you decide to keep this money into your pocket for small expenses.
Now second category
2) Now let us consider the previous case example:
you want to buy a bike you save 5,000 rupees every payout of your income then at the end of the year you go and buy a new bike for yourself.
This is the power of saving the small cut from your income that can give you a big advantage. You Can buy anything with this strategy to save money.
Another good example come in my mind of saving please read it carefully,
One boy who wants to see her mom that she is facing difficulty in storing the things of kitchen items daily fruits, food, milk, etc.
His son is saving money from the gifts he got in his childhood and daily save 1-2 rupees how much money he got because he wants to buy a refrigerator for his mother, and guess what he will buy it in 5 years.
This is a real example of saving money from the news I read in the newspaper a year ago.
Before saving money you have to decide your goal what to do with it except emergency situations if you think in this way you realize that you want many things that you have to buy for your family.
You have to set a budget for students’ education, their marriage, your retirement, you can save money and go on a trip like a world tour.
Yes, this is true that storing money means decreasing value of it because in India every year the inflation rate is up to 6% which means your value of money is decreases day by day so another option is for that is F.D (fixed deposit), mutual funds, saving accounts, liquid funds, etc.
there are many options available in the market to save your money and earn interest our ancient inherited consider gold is the biggest best way to store money.
This invested money generates Interest which will help you to save more money than you actually save if you save for a long period of time it grows with compounding rate.
Also read- Financial planing
3) Importance of Saving Money
In your life ups and downs are always there, it means you have to be ready for it financially and saving is only one option,
that means for personal finance the importance of saving is in the topmost position.
There are two options of savings:
- Store/save your money
- Create Assets.
They are not the same.
Put your saving money in a bank and don’t spend it. While assets are the things or machines which create more Saving money has a lot of disadvantages.
You don’t get the benefit of exponential growth. The benefit of hedging against inflation.
Or the benefit of increased returns. When you invest, the investment pays you back. If you want to, your investment pays for reinvestment, as opposed to the money coming out of your sending money.
That said saving has some advantages. The main advantage is liquidity. Saving is a hedge against hard times. Other advantages are the security (savings are generally FDIC insured), and the consistency.
The value of your savings remains largely constant and therefore can be relied upon to have roughly its value when needed. Ideally, however, this is a step towards your financial goals.
When the passive income of your assets exceeds your expenses, then you are financially free.
Also the more you live lavishly the more you make yourself feel. The practice of saving makes you rich and meets your thinking with rich people.
The simple logic of saving it to get financial freedom to save more to earn interest more and enjoy your life more without work.
People don’t need to save money, but it is a good idea. Here are some reasons:
- Emergencies. What if your car breaks down or your heating goes out in the middle of winter?
- The future. The United States has only social security for retirees. That is usually a modest amount, at best, and not enough to live well on. Saving for the future is a good idea.
- Big purchases or life events. You’ll need to save money to buy a flat or house or car. A family costs a lot more.
- Safety net. Take care of your health many people are failing due to this. How will you support yourself? Most governments don’t give out much money and the onus is on the person.
4) Worksheet on Saving money
Let, meet your savings and investment requirements.
1. Start with savings account
The first step of opening your savings account compares online all savings accounts and opens which gives you high interest. Remember that it should have net banking and debit card facilities.
2. Create installments for savings
Pick some investment plans and make a monthly SIP for savings so you can take any mutual funds for a long time.
3. Pay bill online automated the process of deduction
Use the online net banking or any other options to automate the process of sip so that you do not realize more about your savings.
4. Don’t use a credit card if not required.
5. Do personal insurance
Protect yourself the hospitalization of any case like an accident or any major injury can finish off all your savings.
So you have to do Personal insurance by taking good company policy.
6 Understand Your wants and needs deeply
Understanding the needs are limited to prioritizing our needs and understanding the difference between needs and want The less we spend on wants, the more we free up our income of saving you can buy at home also.
5) Where does your money really go?
If you don’t know where your money really goes then write your daily expenses and track your money on paper then eliminate the wastage of money uses this will help me in my college days when I was living in Hostel so I use this technique to control and save my money.
I observe that there are very small things in which we waste our money if we act smartly then we have different options in the same budget.
if we take about food if we buy a burger of 150 rupees from Mc Donald’s we have an alternative option of fruits which gives us the energy we have to understand the need, and hunger is our need but we want to eat a burger.
6) Difference between saving money and Store Money when to invest it.
Not only by saving but saving and investing.
The name is Rakesh jhunjhunwala India’s greatest investor.
By doing investment in open-end diversified mutual funds even by a small amount monthly for a long time period, you can generate a much larger corpus.
Monthly investment=rs.5000 Expected return=15 percent CAGR (compounded annual growth return) Duration of investment=23 years.
So just think that in 23 years you are going to get 1.19crs Yes a whopping rs.1.19 CRS.
You invested 13.8 lakh and you got 1.19crs this is a power of compounding
So start now, invest regularly and invest for the long term and you will be a winner for sure.
This return is possible because India has a long way to go on the path of development to reach up to the level of developed countries and in this process generate handsome returns. Yes just look like the past data of Sensex it provides 15% OF RETURNS on India
Hence take your call.
Birla equity fund.
Kotak standard multi-cap funds.
Do invest by SIP, OPT for the direct plan growth option. Search the address of the fund houses using google. These fund houses have their offices in almost all big cities of India.
So, at last, I want to say that decide your goal first then, decide the amount of money which you want to save, start saving money and keep learning about investment plans to double your income in a year. So go and just list out all your unwanted expenses.
Ans.1) To save money the first condition is to pay yourself first and then put it into a bank or create some assets.
Ans.2) You have to save money according to 50/30/20 rule pay your self 20% of your income and that much money you can save.
Ans.3) Saving a small amount of money gives you benefits in the long term but you have to save according to your retirement.
Ans.4) You have to do your Life insurance must.
Ans.5) No saving accounts only balance your inflation rate.