Skip to main content

5 ways to encourage yourself to Save More

We Indians have always been good savers with our gross savings rate at 31% of GDP in the year 2016. Savings rate is the share of gross savings in Gross National Disposable Income (GNDI). But, as per IMF(International Monetary Fund), its gross savings rate has actually fallen from 37% in 2007-08 to 31% in 2016.

                                                                                                           (SOURCE: DBS Group Research)

This decline in the savings rate is a gradual decline which could be due to multiple reasons like low income, high expenses, tough economy etc. Household sector is highest contributor to the gross savings. In household sector, there has been decline in savings in the physical assets and increase in savings in financial assets, but the share of financial savings is still too low. Let’s look at the ways in which we can encourage ourselves to save more in financial assets.

1.       LEARN
We normally tend to avoid something we don’t understand. And with variety of financial products available at our disposal, one obviously gets confused. Many a times we blindly follow our friends and relatives for investments and then burn our hands. The key is to learn, understand, and then take action.

2.       SET GOALS
You just have a fair idea that you need to save. Having no specific goal in your mind does no good benefit, it rather distracts you from saving. Create realistic goals to give purpose to your savings, be it buying a new car, saving for vacation, or your retirement. To see your savings, grow and meet your set goals will be a real motivation to save more.


3.       AUTOMATE YOUR SAVINGS
We are living in digital space these days with the world in our mobile phones. Then why not bring this automation in our savings as well. You can set an auto-debit from your bank account towards your savings fund for the required date. By doing this, your money will get invested automatically on a pre-set date every month. It will save you the hassle to getting to do the work yourself, and you won’t even know that you have shifted to INCOME-SAVINGS = EXPENSES mode.

4.       STAY IN CONTROL
As per research, people who feel powerful around money are much better with their money decisions. There is no need to fret if you have made some wrong financial decisions. You can always sit back, think through, and take corrective action. It will not only enable you to save your money but will also give you a lesson with regards to your future savings.

5.       KNOW YOUR FINANCIAL APPETITE
We all are different individuals with different choices, and the same relates to our savings as well. Some of us are risk-takers and some of us prefer risk-aversion. Only if you are comfortable with your portfolio instruments, will you invest more. In the long run, equities have performed much better than any other asset class. Having little bit of equities in your portfolio will only benefit you provided you stay invested for the long term. Seeing your money grow will obviously nudge you to save more.

Saving money for your future is important. Once you are in savings zone, you will be having money for all your important milestones like kid’s education, your retirement, or any other goal that you need money for. You just need to know what motivates you to keep saving.


Charu Hastir, CFPCM is founder of http://www.theriteplan.com/. Rite plan is an online financial planning portal created to achieve a single objective of providing easy and Do It Yourself Financial Planning to netizens. Rite Plan is wholly owned by Tikkun Olam Financial Planning Services LLP. Please visit: https://theriteplan.com/index.php?route=common/home/

Comments

Popular posts from this blog

2018: 5 Money Lessons we need to unlearn

I. FD’s are the Best Investments Post Demonetisation Banks have reduced their deposit rates. Following which Fixed Deposits now are not an attractive debt investment option. Moreover, If you fall in 30% Tax Bracket then the return which you will earn from your FD will fall further. II. Time the Markets They Say, Time and Tide waits for none. Well, you can say the same for equity markets as well. So, don’t try to time the market, stay invested for the long term. *Sensex moved from 26595 to 34056 in the year 2017 III. Save only during Tax saving season As Benjamin Franklin rightly said, “You may delay, but time will not.” You should not save only in the Tax saving season, you should invest systematically with discipline at regular intervals. This way you can average out your returns. IV. Rely on your Company Health Insurance Most of us don’t take Personal Health Plan, thinking that our Company covers us. But have we ever thought of a scenario when we ar

What is Financial Planning?

What is Financial Planning? One of my friends came to my place for a cup of coffee and while chatting over how life is going, where is it heading, he told me that his elder daughter wishes to go abroad for her graduation. And when I asked him that how is he planning to fulfill her wish, he just laughed it off saying that her graduation is 10 years away, why should he get worried about it now. This attitude of his made me think about the importance of planning ahead of our financial goals and how many of us are conveniently ignoring this very fact. The Term Financial Planning defines itself as planning your finances well. It is a perfect marriage between your finances and your life goals. Efficiently managing your expenses and savings in order to achieve your future goals is nothing but Financial Planning. What are future goals? They differ from person to person. Some might want to take a luxurious trip abroad and some might wish for own home. But there are few goals which m

Union Budget and Your Financial Plan?

Honorable Financial Minister Piyush Goyal presented this year’s Interim Budget on 1 st February 2019. Every Year, on the day of the budget announcement, you can see almost every individual glued on to their Television or mobiles to check the budget updates with much excitement. Sometimes the Budget announcements cheer us and sometimes they make us sad as we think that there are not many benefits being offered for individuals in our tax slab. Budget is also referred as Annual Financial Statement as it contains an extensive account of the Government’s finances i.e. Government’s revenue and expenditure for the fiscal year. How relevant is this budget when it comes to our personal financial savings? Should we wait for the Budget to be announced and then start our investments or should we do our investments without any relevance to the Budget? Let’s discuss this in detail. Budget helps in Tax Planning Budget surely helps in planning the taxes for the next financial ye