The New Year is the perfect time to make significant changes in your old financial habits.Saving money might seem overwhelming, but with a few tweaks to your lifestyle, it won’t be a big deal. According to a report by NABARD, almost 88% of the rural Indian population hasa savings account in an authorised bank. This only goes to show how financially savvy Indians are becoming and taking their money goals seriously.
Here are a few realistic yet simple tips to start saving towards your financial goals this year.
Automate Your Savings
To make the process simple, you can opt for auto transfers. This way, a portion of your salary will automatically get transferred to your savings account at chosen intervals. You can decide the amount to be transferred and the date. This way, you won’t be tempted to spendit all because you won’t have access to the savings in the first place. This restriction is particularly great for people who are unable to stick to their decision to savefor the future.
Invest in Mutual Funds
The process is simple and paperless.A professional fund manager will work on your behalf toinvest in assets that will generatethe best possible returns over time. You can either invest a big lump sum or go for an SIP. You can keep track of the market movements and invest accordingly. Under Section 80C of the Income Tax Act, investing in mutual funds makes you eligible for tax exemptions too, which can help you save more. However, mutual funds are subject to market risks. Make sure to educate yourself to make an informed decision.
Open a Fixed Deposit Account
The good thing about fixed deposits is that the interest rate tends to be higher than a simple savings account, while your money stays safe from market risks. However, you are not allowed to withdraw the money before the maturity date. On the due date, the bank will credit the interest along with the principal to your account. An important investment tip is to use an FD calculator to determine the amount you need to deposit to reach your financial goal.
Set a Budget
Get an idea of the amount you spend each month in terms of household expenses and basic needs. This will give you an idea of where you can cut back to save more. You can put this leftover money into savings. Ideally, you should save 20% of your income. A good way to stick to your budget is to limit your spending. Divide your expenses into various categories and cut down unnecessary purchases. For example, you can opt out of paid channels on television, which you no longer watch or cancel memberships that are no longer useful.
Check for Small Expenses
You might not realise it, but at times, minor expenses can add up to create a huge financial burden. One fancy cup of coffee per week or a local concert a month can drain out enough money to hinder your savings. Cut down on these to reduce the cash outflow.
Savings act as a solid support in times of crisis or when fulfilling your long-term and short-term life goals. Start the process early with these savings tips to ensure maximum benefits.