The most basic financial advice that you can get is on savings and how to save. But saving takes a bit of discipline, and it is critical to know the reasons why you should save.
Savings require a consistent approach and not knowing the reasons why we are saving will not keep us motivated to save money in the long run. In this article we will discuss three reasons why you should save and hope they will keep you motivated to save for your financial goals.
It is about your financial freedom
Savings have much to do with your freedom to allocate funds when you need them the most. This can only happen when you have a goal in front of you. It is possible that you may not have a targeted spending plan, but you will find something in the future. And you should be ready for that. When you have money in your bank, it is much easier to think about spending.
How much you should save depends on your financial goals. Again, saving gives you an advantage because you don't have to rely on others for support.
Be flexible with savings. Look at your financial goals and set aside some funds every month in a savings account. You can go for a zero balance savings account, where you don’t have to maintain a minimum balance in the account at all times like with other savings accounts. A digital savings account can be opened online within minutes, and the account opening process is paperless.
Savings support financial security
You can also look at savings as an instrument that provides financial security. Money is required not only to support your expenses but also to secure your future. We live in a world where price hikes and inflation are unavoidable realities. You should have enough money saved in an account to support you during difficult times and also fuel your retired life.
Create a dedicated emergency fund where you will save money to sustain unexpected expenses. You can also open an investment fund and put aside some money that you can use for monthly investments. A retirement fund is also very important so that you can support the kind of lifestyle you wish to have after retirement.
So, you see, saving is not only about the present moment; it is essential for the future and unexpected expenses.
If you have money, you can take calculated risks
All of us have some passion that we want to follow, but to be honest, money along with dedication is equally important to pursue our passion. Savings is important to build a reserve so you can take some calculated risk without worrying about living expenses.
For example, if you want to start a new business or are looking to switch your job and apply for one that is more in line with your passion, for both of these causes, you need money. Financial backing will come in handy on such occasions.
Build your savings so you can explore new possibilities. It will give you a way to live life on your own terms.
Why should you save money?
It is simple; you can live a financially secure life only when you have money to spend and don’t have to completely depend on others and your monthly pay cheque. Emergencies are unwelcome visitors, but if you have money saved aside, you can deal with them. You also need money if you want to pursue something new.
Hope these reasons are just enough to keep you motivated and help you save money for your big purchases & goals.
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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.