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/