Tag: Personal finance

What Is Saving? A Beginner’s Guide.

Saving is one of the simplest and most important financial habit you can develop.

you earn money for today, but you may need money for future may be for unexpected expense or emergency, planned purchase or important financial goals.

Instead of spend your recieve money you had keep focus on to keep aside money for future use.

this is called saving.

In simple words:

Saving means to keep aside small amount of money for future use instead of spend immediately.

Example:

if your income is about 35,000 per month. you has to immediately keep 5,000 month aside before spending on any penny from it.

Saving do not start with huge amount of money it may be start with very small amount of money.

For beginner, the Most important thing is to develop the habit of saving regularly.

Why Is Saving Money Important?

Saving Can gives financial safety net and help to prepare your future needs.

Some Important Reason to develop saving habits.

1. Saving Helps You prepare for Unexpected Expenses

LIfe is a full of unexpected moments.

For Example:

• Vehicle Repairs
• Unplanned Travels
• unexpected bills
• job lay offs
• Home repairs

If you keep lumpsum amount of money aside for something unexpected events or emergency events.

this is why we called emergency fund and it is starting point.

2. Saving Helps You Reach Financial Goals

Many Goals Require Money.

Example:

Goal: Let’s say want to buy ₹50,000 worth PS5.

it is not save in one time directly one time money comes I will buy it.

Keep it simple way, Put a Side money Every month let say ₹5,000.

₹5000 X 10 months = ₹60,000

now go and buy it.

The amount amount may change as per your income, expense and goal time horizons.

The important is to start your saving towards your goal with smaller and regularly steps.

3. Saving can Reduce the need of borrow

let say you required urgent 15,000 for any important payment.

Car break down and you have tmororrow important meeting at your job. to attend meeting at right time. Car repair should done by today so that you go to office tomorrow on time.

In this situation you have no saving, first ideas comes to your mind is to borrow money from relative or friends.

If keep aside saving for this type of situation you have to just tap and transfer to service account without taking any new debt,

saving gives you this type Financial Flexibility.

saving willgive you this financial relaxation and without financial debt and keep you been prepared for future substances.

4. Savings Helps You Build Financial Discipline

Saving is not just one time amount gather and doing nothing after achieve this amount.

Example

someone just achieve amount of saving ₹35,000 and stop it from next pay month but other side somone regularly save ₹1,500 evem after achieve saving goals after ward also.

Consistency matters.

You can increase you saving over peroid of time to improves situation.

5. Saving Gives You More Financial Choices

Having money gives you more choices in life in nevery situation.

Example:

• Planned purchase for your wants
• Pay your important expenses
• work toward your financial goals

Without saving, even smallest amount goes to unexpected expense feels lot of pressure.

Saving gives great sense of financial choices and flexibility.

What Are the Different Types Of Saving

All Saving not go for one purpose at a time.

For Beginner, give purpose to your saving to keep going it:

1. Emergency Savings

Emergency saving are money that kept aside for emergency situation.

Example:

• Urgent medical bills
• car repairs
• home repair
• loss job
• urgent family financial situation

Purpose of saving should be stronger that even you get good discount any shopping still stick to your saving.

clear goals is to use for emergencies on;ly.

2. Short Term Saving

Short Term saving is for goals to achieve in next month to three months. Require this types purchase very soon.

Example:

• Buying phone
• starting a paid courses
• planned trip
• uncoming expenses
• buy a laptop

3. Medium Term Saving

These types of saving goals required some more time to achieve goals.

Example

• Buying Vehicle
• Large planned purchase
• International Trips
• upgrade skill courses

these may take some ltime to achive but stick to it gives you money you get target.

4. Long Term Goals

Some saving requires longer time period.

Example

• Buying Home
• Education Aboard
• Retirement

Long term goals, Keeping money aside may not enough

This types of goals requires invest in asset and work on assetto achieve long terms goals.

Saving and investing are not same thing.

Saving Vs Investing: What Is the Difference

Beginners often get confuse saving and investing.

Basic Difference:

Saving

Money is generally set aside for future use and emergency or planned goals.

Investing

Money is put into asset with expectation of growth over time.

Example

If you are planning for a goal for long term goals with many years away, just by saving that long term goals cannot achieve it.

Investment will comes in a way growth your money over period of long period time.

In Simple word investment will helps you grow your money with time for long period.

Investment can be done with your understanding of risk tolerence, income, saving and nature of investing risk.

How Much should You Save?

There is no amount that is perfectt for everyone.

Your saving capacity factor depends on:

• Your Income
• Your Saving
• Your Expense
• Your Debt
• Your Financial Goals

People only able to save 10% of their Income.

Example:

Monthy Income: ₹50,000

₹50,000 of 10% is ₹5,000 only. start smaller amount for saving habit and later increase it.

How Can Beginner Start Saving Money?

New to saving, keep the process simple.

Step 1: Choose a Saving Goal

Give your saving purpose

example:

I want to Build ₹50,000 for a emergency fund

specfic target of saving makes saving easy.

Step 2: Decide on Regular Amount

Choose a amount realistically save on regular base.

Example:

5,000 for 50,000 salaried person is small amount to save.

Consistency is more important than choosing unreal amount to save.

Step 3: Save Soon After Receiving Income

Instead of waiting untill end of month and keep saving whats remains end of month, keep saving soon after receiving your income.

keep a saving early as income comes.

in simple words, pay yourself first

And than rest of it goes to your essential expense and personal.

Step 4: Keep Saving Separate

Keep saving money aside from regular expense money.

Put money in another bank saving account so that you can not touch or spend in daily money expense.

If you cutoff easy access this account and untouchable this account. It is easy to save the money easily.

Step 5: Track your Progress

Check your saving regularly

Example

Month	monthy saving	total saving
january	₹5,ooo	₹5,ooo
Febuary	₹5,ooo	₹10,ooo
March	₹5,ooo	₹15,ooo
April	₹5,ooo	₹20,ooo
May	₹5,ooo	₹25,ooo
June	₹5,ooo	₹30,ooo

Consistency is a key of saving habit.

Common Saving Mistakes Beginners Should Avoid

Saving Without a Goal

If you do not know the goal saving, after some amount saving you spend immediately.

Setting an Unrealistic Goal

tsarget should be suitable and realistic with your income, expense and saving capacity.

Using Saving for every wants

saving is for emergency not for every normal spending like shopping.

Ignoring Emergency Saving

Before focusing on long term goals, be prepared for enough emergency fund for unexpected situation or needs.

Camparing Your Saving with Others

Evryone have different income, expenses and situation in their life.

Your Financial Progress should measured in your own situation.

A Simple Saving Strategy For Beginners

You can start with three simple catgeories:

1. Emergency Funds

Money for unexpected situation.

2. Short-Term Goals

Money for planned spending for very soon for next or next to next month.

3. Long Term Goals

these money are for longer period time and it’s may takes around years and years.

Investing may helps you to grow your time over period time with higher returns.

These simple step simply say that without purpose for saving is just collecing money for dust.

FAQs

Whats is saving?

Saving means Keeping some amount of money aside every month for futre unexpected expense, futre financial goals and Needs.

Why Should I save Money?

It is Preparation of unexpected expenses, achieve future financial goals and reduce dpends of borrowing money.

Is Saving the same as investing?

No. Saving is to put money aside for future needs or wants. investing is for putting money into asset for long term period to growth of money and risk will be there.

How much money should a beginner save?

there is no such fixed amount that beginner should start. It depends on your income, expenses, saving and financial reponsibility but try to consistency keep saving regularly.

Where should I keep my savings?

There is no such fixed place to keep your saving. It’s all about in emergency how easily accessible your money without any delay or fine.

Link this article to:

• What Is Money? Meaning and Importance of Money
• What is Financial Literacy?
• Financial Literacy Vs Financial Education : What Is the Difference?
• What Are The 5 Main Areas of Personal Finance?
• What Is Financial Planning? A Beginner’s Guide
• What Is Money Management? A Beginner’s Guide
• What is Income?
• What is an Expense?
• What is Budget?
• What is Saving?
• What is Inflation?
• What is Investing?