Saving money daily is a great way to improve your personal finance management skills and improve your financial situation. Not only that, you can enjoy a multitude of benefits by saving money daily. The more you save, the easier it is to save more.
If your income barely meets your expenses, the thought of saving money every day may seem absurd but have you ever considered the benefits of saving money daily? Everyone has to begin somewhere. If you work really hard and save sensibly, your financial condition will improve with time.
Personal financial planning will help you get started on your savings journey.
This article will go over the merits of saving daily and how it can improve your personal finance management.
Financial peace of mind
Who hasn't woken up at midnight worried about financial emergencies or big-ticket expenses? If your finances are tight, you may be concerned about how you will pay your rent or home loan EMI and other utilities.
If you are currently earning well, you might be planning early retirement and wondering how much longer you will need to work. Or if you are approaching middle age, your children's higher education expenses may be playing on your mind.
With personal money management, you will know exactly how much you must save and control your expenditure. You can rest easy knowing that your rent/mortgage for the current and coming months are taken care of.
You can put aside substantial funds for children's education. You can even plan your income in such a way that you can go three or six months without working.
This is the basis of personal money management. Having funds in the bank gives you peace of mind, allowing you to do things that make you happy. However, finding the appropriate savings account is critical to ensuring that the cash you do save gets the most return.
More options in life
Personal Finance 101 says - the more cash you have preserved, the more influence you have over your own future.
If your work is causing you excessive physical and mental stress, you can resign even if you do not have another job offer on hand. You can even take a sabbatical to regain your composure before getting back to the grind of a regular, full-time job.
If a home upgrade or a second home has been on your mind, you can act on that when you have excess funds.
You will be better prepared for any unforeseen problems, especially related to your health.
While money does not fix all problems, knowing that you have a financial cushion thanks to your abundant savings will offer you a greater sense of security and confidence to navigate the tedium of everyday life.
This is an important lesson in financial planning for beginners.
More returns from saved money
Almost all of us have to work countless hours per year to earn the majority of our income. However, when you save and invest your cash in the appropriate investment avenues, your wealth begins to work for you.
You will have to work fewer and fewer hours as your wealth grows, and ultimately, you could be able to quit working entirely.
A typical savings account in a bank or other financial institution will pay you 2% to 4% interest each year. This does not even match up to the annual inflation rate, which is ranges between 6% and 7% in India. This is something you need to understand as a part of personal finance for beginners.
Therefore, you need to be aware of investment options that give you higher yields with which your money grows. At the same time, you must also ensure your money's safety. Investment routes like Public Provident Fund (PPF) and Employee Provident Fund (EPF) are for people who don't want to take chances.
These funds provide returns of about 9% and are largely deemed secure since the Indian Government guarantees it. You even get a tax deduction on the interest under the Income Tax Act Section 80C. These investments have an upper limit; for instance, the highest amount you can invest in PPF is INR 1,50,000 per year.
Most banks today offer the facility of a Public Provident Fund account. You can deposit the maximum amount of INR 1,50,000 across one to twelve deposits a year, depending on your convenience. The minimum deposit annually is INR 500. PPFs have a 15-year maturity term, but you can withdraw them earlier if specific criteria are met.
Employee Provident Fund deducts a portion of your monthly pay, and your company matches that amount and puts the same in your Employee Provident Fund account.
Such risk-free investments are generally recommended by financial advisors, particularly for retirement purposes.
Following the statutory lock-in time, investors enjoy the option to withdraw their funds. The withdrawal amount is tax-free as well.
These investment schemes are best suited for those whose employment situation does not provide for a post-retirement pension from the employer, which is, in most cases, private sector employees.
Other common personal finance investing routes include mutual funds, or directly to equities, debt instruments and others.
The bottom line
By saving money every day, you not only make your life easier but also create a habit that will automatically enable you to trim your expenses, as you focus on your needs and not wants.
The key to saving more is starting early. Set a goal and work toward making it a reality.
There are multiple personal finance apps available online that can help you set up an objective, as having a clear goal is critical.
As a first step, take stock of your current monetary situation. Don't be afraid to set ambitious targets, as that will help you work harder toward achieving them. Check out some of the best money management apps that will ease your process with pointed insights. These apps can also help you in managing your personal finances online.