You may save a lot more money if you avoid money-saving blunders like these. Saving money does not have to be challenging if you use these four suggestions instead. We have also listed the best savings plan to opt for.
Although more individuals are saving money than ever before, this does not imply that it is simple. Many consumers make blunders that reduce their initial savings rate. However, just because you have made a mistake does not imply that you must continue to make them. When you know better, you do better, and money is only one example.
We’ve compiled a list of frequent money blunders and what you may do instead.
1. Not Prioritizing Your Saving
While you don’t want to disregard high-interest debt to save money, you also don’t want to prioritize certain forms of debt above saving for the future. This is arguably one of the most common misconceptions individuals have while attempting to save money.
Federal student loans with low-interest rates, for example, and mortgages are often seen as kinds of “positive” debt. Depending on the interest rate on your student loans or home, it may make sense to prioritize retirement savings or building an emergency fund before focusing on dramatically decreasing your debt.
Suppose your company matches your 401(k) or other retirement plan contributions and the estimated return on your plan is more than the interest on your student loans or mortgage. In that case, you should prioritize saving over debt repayment. That way, you’ll have more money saved for the future, and that money will have more time to compound and increase.
2. Buying Items Because They Are on Sale
Who doesn’t like a good deal? There seem to be very few individuals. However, purchasing things on discount, promotion, or clearance does not always result in cost savings. In fact, when you shop the sales, you are more likely to spend more than when you do not.
You’d only save money by buying a marked-down item if you had planned to spend X but ended up spending Y, then placed the difference in savings.
For example, suppose you intended to purchase a pair of shoes for Rs. 3000, but they ended up costing Rs. 5000 when you got to the shop. Instead of spending it on anything else in the shop, you put the Rs. 2000 you didn’t spend on shoes into your savings account or invest it. However, if you spend Rs. 2000 on other products, you are not saving money.
3. Saving Without a Goal
Your money needs a mission or a job to do, and it is up to you to provide it with one. It is more difficult to save money if you do not have a goal in mind. After all, if the money isn’t being used for anything specific, what’s the sense of saving it?
Create a schedule and a target amount for your savings objectives, such as “retirement,” “vacation,” or “down payment on a property.” For example, how much do you want to save for a down payment? When do you want to start searching for a house?
Having a clear objective in mind for each of your savings accounts will make you less tempted to dip into them when you’re in a crisis and more likely to treat your savings seriously.
4. Forgetting to Save Each Month
You have the best of intentions every time you are paid. However, you wind up coming to the end of the month without having saved any money. Instead of saving the money you have leftover after paying your bills and purchasing other products, commit to saving a set amount of your income before spending it on other things.
One simple strategy to ensure that you place money away each pay period is to have the cash moved to the proper account as soon as you are paid. You’ll never see the money you’ve set aside for savings in your checking account, so you won’t be tempted to spend it.
4 Best Savings Plans in India to invest
Best Savings Plan #1. Fixed Deposit (FD)
For many years, fixed deposits were thought to be the safest and best savings plan in India. Because the RBI oversees these FDs, their safety is good and has a low default rate. The interest rate on FDs varies per bank. On their FD investments, investors may borrow at cheaper interest rates.
Furthermore, investors can reinvest interest rates to obtain growing income. Senior folks may benefit from increased interest rates on FDs, which will assist them in managing their costs after retirement.
Best Savings Plan #2. Recurring Deposits (RD)
Recurring deposits, which are similar to fixed deposits, may be established with any bank. This is the most typical strategy for storing surplus cash for short-term purposes. It pays fixed interest on the amount invested till maturity. Creating a recurring deposit (RD) account using your net banking account is now very simple. An RD is formed once you specify the amount to save each month and the duration.
Best Savings Plan #3. Public Provident Fund (PPF)
The public provident fund (PPF), like the employee provident fund (EPF), may be created by anybody. These investments have a 15-year term and a current rate of return of 7.1 per cent, which is set by the government each year. While the minimum deposit for each PPF account is Rs 500, there is no maximum; however, investments up to Rs 150,000 are tax-deductible.
Best Savings Plan #4. Liquid Mutual Funds
Liquid mutual funds vary from equity mutual funds in that the former invests primarily in short-term assets such as government securities, financial instruments, and commercial papers, whilst the latter invests in long-term assets such as stocks.
Though there is some risk involved, it is not as significant as in other mutual funds. Depending on market circumstances, the average rate of return given by liquid mutual funds varies from 6.5 per cent to 7.5 per cent.
Wrapping It Up
Saving money might be intimidating at first, and it can also be more complicated than necessary. However, if you follow the procedures outlined above, you can be confident that you will make progress toward and attain your financial objectives in no time.
As previously said, there are several types of investment best savings plans available in India. It is up to each person to choose the best savings plan that suits their budget and goals since it is crucial to understand that today’s savings will help you live a better financial future.