Are you one of the few younger people who are constantly giving excuses to delay saving?
Are these one of the few replies that you give whenever your parents or a well-wisher highlights the importance of saving:
The thing is, all these reasons are valid and makes sense. But still you can’t negate the importance of saving.
Here are a 5 important benefits of saving money early:
Habits are just like muscle power. The more you use a power, the stronger it becomes. So, if you save early, it will become easy for you to save later on in your life. Also, with the increase in salary or income, you will save more.
Planning your savings is a cornerstone habit. This means it will lead to various good habits such as using credit wisely, cutting down lavish purchases, etc.
When you are young, your expenses are low. You may think you draw a low salary, but your expenses will increase in the next few years. You may have to take the financial responsibility of your parents, children and other family members. So although your income will increase, your expenses will also shoot up.
Saving early will also help you accumulate higher corpus. When you save money or invest money early, you have an advantage over others. This advantage is time. With more time on your hands, compounding gets all the time to show its magic.
Compounding is the process where your earlier accumulated interest earns interest. Time is the most important factor in the compound interest formula. So, the longer your money stays invested, the higher will be the growth potential of your investment.
Saving money is not an isolated area. After you save, you are most likely to develop an interest in savings and investments. You would look out for different ways to invest, compare the different options, research on your weekends and invest more money.
This will help you be aware of the different available options and make your money work harder for you.
Why do we save money in the first place? We save our hard-earned money so we can fulfil our future dreams. We are compromising your present happiness for a better future self. We do this all the time. E.g., if you go to the gym or workout, then you are most likely to eat in moderation, stay away from junk food, sweets etc. It’s hard. But just because something is hard doesn’t mean that it is wrong.
Saving money is like working out. Achieving your financial goals may require big pockets and you may not fulfil it at one go because of your various financial responsibilities.
Saving and investing helps us to do that. The earlier you save, the easier it becomes to achieve your goals because you can build a bigger corpus with compounding acting on your behalf.
Your goals can be anything from buying the latest smartphone, bike, or saving for early retirement. Just start saving.
In this article, we have talked about the importance of saving early. If you are a student, intern or recently started working, the different investment options may scare you. In that case, you can open a new digital savings account like Kotak 811 and start transferring a little amount of money every month and open a Recurring Deposit (RD).
Once you have become familiar with investments, you can set up an SIP, book a Fixed Deposit(FD) etc. The world is your oyster.
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