Personal Finance: Saving

The world runs on money - we know this as a fact. However, if we spend our money without saving, we may come to a day when we run out of money.

What is saving?

• Saving refers to the part of income which is not spent, in other words, it refers to not buying unnecessary things.

• It also refers to the total funds of an individual or a household.

Saving is a healthy habit as it teaches the value of money.

How does it help?

• Money saved can be deposited in a bank at an interest rate or be invested.

• Savings can also be put into funds for future short-term or long-term plans.

• Saving helps avoid debt.

• Savings can be used for making expensive purchases, such as a car, a house, etc.

It is essential to know how to effectively save money in order to gather and grow your wealth.

How can I as a student do it?

• As a student, you can start saving money by keeping track of your expenses and cutting out unwanted expenses.

• It is important to differentiate between your wants and needs in order to be able to efficiently save money.

• Try to avoid overspending on gifts and vacations.

• Avoid impulsive spending. You can save money by shopping when discounts are available.

• Avoid buying overpriced branded products, instead, spend on reasonably priced goods.

• You can also cut down on expenses by borrowing second-hand books and school stationery items instead of buying new ones.

What are some techniques to make saving easier?

• Ninja Technique: Save half - spend half, quite simple really.

• Set goals: Setting goals gives you motivation, achieving goals is extremely satisfying.

• Maintain a budget: Maintaining a budget helps in understanding where our money is used and how much is left to save.

What are some drawbacks and how can I mitigate them?

You might have to cut out certain luxuries. Although it might seem like you have to reduce your standard of living, in the long run, saving money can help provide financial security and keep you prepared for emergencies. Investments grow at a much higher rate than savings, however, saving your money is a lot safer and carries very few risks compared to investments.

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Author

• Siddharth Rath

• Samik Heda