We like to think that we have no control over money. While the amount that we are earning may not change tremendously in a few months, but we can change how we deal with the money that we have in our hands.
You can start with a simple plan. Almost all of us have at least one savings account. If don’t have a savings account, click here to open a savings account.
Who knew that savings account can help you with your savings. Here are the three ways through which savings account can help in your finances.
Most of us want to save money. But, we know how easy it can be to make an impulsive buy. It will just make you feel happy for a few hours. You may end up regretting the move. But thinking about it will do no good.
To keep a tab on such impulsive shopping, transfer some of your money to a separate savings account. You can use it as an emergency fund to take care of emergencies such as car break down or immediate house repairs.
The right way would be to cut the root cause of spending more than required i.e. the debit card. When you are going to the shopping mall, you can keep the debit card of this savings account in your wardrobe. You can also keep this debit card untouched, locked inside your locker. It is to be used during emergencies.
We are not telling to avoid expensive things. But these things should not be done in an impulse. It should be taken with intent and proper planning.
That brings us to the second point.
Most of us want to buy beautiful things. And that takes some money. Buying high ticket size purchases or booking a flight ticket may shake your finances. Having a separate account for your splurges will make sure your primary account does not get out of equilibrium.
Your splurges can vary. It can be spending a weekend gateway with your girlfriends, taking a solo bike ride, an expensive handbag or shoe or bike gears.
These splurges can be meaningful at times as well. E.g. going to a live concert of your favourite band or singer may be one of a lifetime event. Hence, it makes sense to go for it then repent it later.
You can contribute up to 10% of your take-home salary in this savings account which is meant for splurges. If you are looking to contribute more, then you may have to let go of purchases that don’t bring you joy.
Read: Zero balance account for your splurges
Automating your savings and investments is the simple and best way to make sure that your money is working for you. According to a rule of thumb, one should invest or save at least 20% of your income. This amount should be earmarked for your financial goals especially the long term goals.
To make automating your investment success, you can keep the auto-debit option on the first few days of the month. You can set up a recurring account or set up a Systematic Investment Plan (SIP) from your savings account. After your salary is credited, your investment will be automatically routed to your investment account or your RD account.
This helps you to save for your long term goals and spend only the amount that you have left in your bank account.
Read: What’s the difference between savings and investment?
These were the three ways through which savings account can help you manage your savings. It is your money to take control…or else the money will control you.
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