Oct 30, 2014,14.23 IST
Save today for a secure tomorrow
Life is unpredictable and the only sure shot way to deal with its uncertainties is by ensuring that you are financially stable. This is where the importance of ‘saving’ comes in. Saving helps you secure your present and build a corpus for your future.
By saving money on time, you can:
-- Fulfill your demands (home, vehicle, other luxuries)
-- Provide for life’s milestones
-- Stay prepared for emergencies and other unexpected expenses
-- Lead a comfortable retired life
The first and foremost rule of ‘Saving Club’ is – Start early. As youngsters, you are often advised by elders to start saving money the moment you start earning. This is perhaps the most valuable financial advice you would have received or you can give anyone. The earlier you start, larger is the amount you can save.
With changing life stages your saving habits must change. You cannot keep saving the same amount of money once you are married as when you were single. After marriage, your responsibilities increase and so do your expenses. You need to start saving for your children – their education and marriage. You must also start preparing for your retirement years.
Have a financial plan in place
It is imperative to have a financial plan in place if you wish to start saving religiously. You must clearly identify your financial objectives, chart out a plan and stick to it. Also, once you have made a plan, it makes sense to review it from time to time. This is because your financial needs keep changing at frequent intervals. So your plan must be flexible enough to adapt to these changes. It is only then can you meet all your financial objectives.
If the idea of making a financial plan is too overwhelming, you can always avail the services of a professional. He will assess your income and expenditure, ask you about your short and long-term goals and devise a strategy that suits you.
Importance of insurance in saving
Life insurance should be an integral part of your financial plan. Buying the right insurance policy will go a long way in helping you save for the future. You should choose the type of policy that is in alignment with your objectives. However, you need to be discerning enough before buying a policy. Keeping in mind your income, the high cost of living and rising inflation, you must select the premium amount wisely.
A child plan will ensure that the future of your kids is secure. You can meet expenses related to their education and marriage. In case you want a lump sum after a specified period of having bought the policy, you should choose an endowment plan. With a money back plan, you get a percentage of the sum assured at regular intervals. This way, you can build a corpus for your future.
If you wish to reap the dual benefits of investment and insurance, you should buy a unit-linked insurance plan. A retirement plan will provide you with a regular income flow once you have stopped working.
If you are someone who does not save enough, this World Savings Day, promise yourself that you will start saving religiously. After all, your and your family’s well-being depends on it.
Principal Financial Planner
Optima Money Managers