It is known to all of us that saving money is a very good habit. No matter how much you earn, whether the earnings are big or small, it is always wise to save even a little bit from it regularly. But amongst those who save regularly, what most of them do is that they wait till the end of the month for transferring to their savings, the amount that is left after incurring all the weekly / monthly expenses. But let me tell you where they go wrong.
See, in this process of ‘expend first & save later’ often we do not even realize how much expenses we have already incurred that we could have done without! So, if we save a portion first and then incur the expenses according to what is left with us, that way our savings are always constant and we can save a fixed amount every week / month. Moreover, that is a really good way to check our impulsive spending habits.
The benefit of having good savings is that whenever we face an emergency, we can worry less about how we are going to manage our finances. This can easily be done by getting a SIP or a recurring deposit.
But if you do not have any savings at all, emergencies may push you to take help from others & be indebted. And in these unprecedented times, even clearing off your debts would be a huge deal to settle. So, you better build up your savings for your good. One of the biggest enemies of savings is procrastinating. You’ll keep on thinking that you can later catch up with the situation somehow & manage things but the reality is otherwise. Having an emergency fund will not only give you your peace of mind but also make you confident to deal with certain unexpected circumstances in future. But remember, this savings is for emergencies only.
Your emergency fund depends on a lot of factors, like, your lifestyle preference, your family size and your goals – both short & long-term ones. Learn to prioritize your goals as well. Focus on your short-term goals first. Make a list of them. Invest some time to think what the most important things are for you and what can be postponed or what you do not need anymore. What needs to be done is differentiation between your wants & your needs. Once you are done with prioritizing your short-term goals, make a budget for your probable expenses and try to stick to that as much as possible. If there is any variation between your budget plan & your actual expenses, try to find out the reasons and how can you improve it.
In this pandemic-stricken world businesses are down and it has impacted the global economy immensely. And naturally personal finances have also been affected as a result of huge pay-cuts and job insecurities are growing in every corner of the world. There are certain situations in life that we do not have control over and it is always good to be prepared.