Indians have always been proud of their ability to save money. This country has a long tradition of saving money for future generations. One doesn’t need to travel far from home to understand the importance of saving. The examples are right in our own homes. However, savings have recently taken a back seat, with the younger generation preferring to spend rather than save. Nonetheless, saving money is important. So, in this article, we will explain the importance of saving money and share five money-saving tips.
Why is the Importance of Saving Money
Saving money is important because it provides a safety net for unexpected expenses, helps achieve financial goals, and provides peace of mind and financial security. It’s also worth noting that saving money doesn’t have to mean sacrificing your current lifestyle. It can be done gradually by setting a budget, sticking to it, and finding ways to save money on daily expenses.
Top 5 money-saving tips.
Money Saving Tips #1: Track your expenses
Having more money than you need allows you to save. So, any increase in income or decrease in expenses provides opportunities to save. Increasing your income isn’t entirely within your control, but lowering your expenses is. Thus, tracking your spending becomes critical.
The key to tracking your expenses is to divide them into needs and wants. Needs are necessary expenses that you cannot avoid. On the other hand, wants are a type of discretionary spending that you can reduce. Therefore, you should sit down and list out your expenditure into needs and wants.
Money Saving Tips #2: Pay your bills on time.
You have already split your expenses into wants and needs. Utility bills, taxes, and credit card bills all fall under the needs category. Paying these bills on time is important because you will incur late payment penalties and charges if you don’t.
For example, you must pay your utility bills by the due date. Otherwise, the electricity company will snap your power connection and may include a late payment fee in the next month’s bill. So, you would end up paying more than you should have. Thus, paying your utility bill on time saves you money in the long run.
Money Saving Tips #3: Use your discounts wisely.
Using your discounts the right way is how you start saving money. For instance, grocery apps like Big Basket, Grofers, Swiggy Instamart, Zepto, or Reliance Jio Mart offer exciting product discounts. Secondly, cashback is also available, which you can adjust with other orders. Similarly, you can order food through apps like Swiggy and Zomato instead of going to a restaurant and get discounts that offset the price difference.
However, be cautious! Discount coupons can tempt you to buy items you might not necessarily need. Therefore, it’s better to think twice before redeeming discount coupons.
Money Saving Tips #4: Pay loan installments on time and close your loans early.
Today, loans are available for almost every purpose. For example, home loans let you buy houses, whereas auto loans are perfect for buying cars or motorcycles. When looking for your loan, you should do your homework well and opt for the loan facility with the lowest interest rate. Remember, your home loans are long-term commitments that could last up to 30 years. Therefore, a 0.5% difference can also result in tremendous savings over the loan tenure.
For example, suppose you want to borrow a home loan of ₹40 lakhs at 7% for 30 years from Bank A. At the same time, a peer Bank B offers a similar loan at 6.5%. Initially, the difference of 0.5% may not seem substantial.
|Bank||Loan Amount||Interest Rate||Time||EMI||Total Repayment|
The EMI of Bank A is ₹26,612, and the total repayment commitment for 30 years would be ₹95.80 lakhs. On the other hand, the EMI of Bank B would be ₹25,283, with a total repayment of ₹ 91.01 lakhs.
Thus, opting for the Bank B loan saves you nearly ₹1,300 in EMI and ₹4.80 lakhs over the entire loan tenure.
You can save more money by choosing a shorter repayment tenure. For example, if you reduce your repayment tenure by five years, your EMI with Bank B will be ₹27,008. The total repayment would be ₹81.02 lakhs. Thus, you save nearly ₹10 lakhs over the entire loan tenure. However, your monthly commitment increases by ₹1,800.
Money Saving Tips #5: Have a contingency plan.
A contingency plan is very important for any saving strategy. It can be of tremendous help in an emergency. Insurance can be handy in an emergency, but every person should set aside a specific portion of the household income towards a contingency fund. It’s similar to having a sinking fund, and one should ensure not to withdraw these funds during its tenure.
At Multipl, we understand that saving money is important for everyone because it enables them to live with their heads high. Therefore, our app helps you create goal-based investments, which means you’ll invest and save money at the same time for a specific purpose. You can create both short-term and long-term savings goals like Vacation Goal, Gadget Goal, Retirement Savings Goal, Child’s Education Goal, and many more. In addition, brands co-invest with you for your goals, thus, giving you additional savings. To learn more, download the app from Play Store/App Store.