Saving as a habit does not come naturally or automatically to most of us . In fact spending is something that most people do without any hesitation, whereas saving is a developed or cultivated habit that has far reaching benefits for the individual in his/her later life and of course , there is no need to tell that it is very important to save part of your income right from the day you start earning !
Reasons why people don't save
We see some People go through an expensive education and land a great paying job and at the end of a decade have nothing to show for all their efforts. This happens often with people who keep postponing and later regret when they don't have anything much in the way of either hard cash or land or any other kind of asset. Here are some of the typical reasons people give for not being able to save.
1, Most often, we see people putting off saving money or for that matter even draw up a proper budget with their monthly income .The excuse that most people have for not saving part of their income is that they are not left with any money to save or that they are barely making enough money to pay their bills and so on.But when they make a budget and stick to it, they find it easier to rectify this and make a start. It takes just a bit of dedication to make the effort and be regular about saving at least a small part of one's income.
2, We dont realize how time flies and before we know we find that we have actually done nothing regarding securing our future financially, so one has to start early !One of the best and time tested money saving strategies is the habit of paying yourself first. There are many ways of doing this and there are also very simple ways to see results that take you toward your goals - having a piggy bank at home ! Many fail to utilise even this simple saving tactic because they are either not trained to do so or simply don't realise the importance. It is these small measures that come in handy and develop into major saving and investment habits as one grows older.
3, Saving money in any form is absolutely essential in life and money saved is money earned. By being careful, like cutting down on eating out and splurging on things one may not need ,one can save a lot of money. It is these little things that help you save steadily and accumulate a healthy balance in your bank account. But we see that most people live beyond their means spending all they earn on things that that are not really essential.
4, One also needs to have a certain amount of dedication to plan out saving strategies and more importantly stick with it. One can see that, those people who save month after month, may be a tiny amount of money, but steadily over a period of time,are able multiply their savings into a considerable amount. All that is required is to be careful , and not to give into temptations and carry on with one's saving habit.
5,We should also remember that we have no guarantee about our health. So it is essential that while we are fit, younger ,healthy and are able to work hard and earn money , we also should save for the future !
Saving and Investment Options
Once you consider all your options and future commitments , you can accordingly opt for the most suitable method of investment. If you have the responsibility of sending your children for further education, you may need resources for which you have to plan early in life so that you don't need to take a loan, or ,at least your loan amount gets reduced. Similarly, depending on your age and life style you need to chalk out the best course that is feasible for you. It is also a good idea to take the advice of a financial consultant since most of us would be unaware of risk factors involved in some of the investment options like mutual funds.
Savings Bank account - Many people are averse to the idea of opening an account in private banks since the minimum balance that they need to maintain is rather high ( Rs 10,000 in most banks ) as compared to Rs 1,000 in public sector banking institutions.Personally I feel that it is one of the best way of saving since you have to maintain the minimum balance , otherwise you need to pay a fine .You also get some interest on it . I call it a rain check ! This also brings in some interest so it is not really a waste as some people think to keep that amount lying in your bank account. Then there is also the option of keeping any accumulated amount in a fixed deposit which gives you a steady monthly return or one can opt to have the entire amount at the end of the period. Bank deposits are reliable and one can even take a loan on the deposit when there is an urgent need for money.
Postal Savings -Another popular method of saving is through post office deposits. Post office deposits ,though pay a slightly lesser rate , have the advantage of being totally tax free for the interest earned for a maximum amount of Rs 4,50,000 for general public and 15 lakhs for senior citizens . Postal savings are not as convenient as bank deposits since they don't have the convenience of an ATM card and one will have to go to a particular post office only to collect the monthly or quarterly interest.
Investing in Property - One of the best option as we all know is to invest one's money in property.One will never lose money invested in buying land. If you are short of funds , it may be a good idea to take a loan and buy a property . This way, the amount you pay for rent will be paid towards your monthly mortgage or loan interest ! And the property prices are sure to rise many times over by the time the loan is repaid . Even if the property market is facing a slump, one has the option of utilising the land or apartment and earning by renting it out. However care should be taken while investing since there can be many loop holes .One should make it a point to consult a legal adviser before taking any decision.
Stocks and Shares - Investing in stocks and shares is another option in which the returns are very high, but if one is not careful one can also loose all the money that has been invested . We have to take extreme care while investing in shares and gain some knowledge about the functioning of the stock market before opening a trading account. Stock market is known for its volatility and the sudden fluctuation can shock you and the chances are that one may either sell or buy in panic and incur heavy losses ,which has to be avoided while dealing with shares. Most people incur heavy losses mainly due to the volatility. It is better to take the advise of financial consultants before buying company shares and sell when the estimated target is reached instead of waiting for it to go higher which one can never be sure of .
Mutual funds - Mutual funds too are an option , although we see a lot of fluctuation in our deposits since they are partly linked to the share market. Personally speaking I have never been comfortable with mutual funds and feel that unless one is well versed in it,or has a good fund manager who is able to help out,it is better to stick with other investment opportunities.
Gold as an investment option - India is one of the largest user of gold and most people tend to invest in gold either in jewelry form or for investment. Buying gold is an attractive option, here too the returns are very good and when we look at the past few years Gold has outdone all other investments. Like in stock market one can see a certain amount of fluctuations in gold prices too, but generally the tendency is for the Gold price to move upwards .This has been the case for many years and is likely to go up further ! Here too one wold never lose money since there is always demand for gold world wide.
Finally, We need to plan our finances in such a way that we are able to put it into maximum use. With proper planning and investing one can do a lot in the way of having a good life at present and also have a secure carefree future ! Investment in any form is the best thing we can do with our finances and if you have not saved at least a part of your income , the whole idea of earning loses its purpose. One should cultivate the saving habit right from childhood so that it comes naturally in later life !