Top reasons to save money!
If you are a kid earning money – say you are about 25 years of age, do you ask yourself ‘why should I save money?’
Well if you are from an Indian family, chances are you have seen the people around you save money. Your parents, uncles, aunts, neighbors, bosses, colleagues – all of them save money, right?
Still many kids these days wonder ‘why should we save money so soon in life?’. Fair enough. One girl told me ‘My parents save a lot of money and my father-in-law invests a lot of money’ – So we should enjoy, should we not? Fair enough, but all of us may not be in such a happy position.
You should save money to:
1. Have your own money: Of course your parents money will come to you, but it is nice to have your own money, right? So start as soon as possible and the money will nicely grow.
2. Create an emergency fund: what if your bike breaks down, or if there is some kind of a financial emergency, or just a friend who needs a helping hand. Nice to have your own cash to help your friend, right?
3. To start investing: I will surely do a post on why you should invest – and do it soon. However to start investing you need to create a saving corpus first. Then a portion of this can become capital of your investing corpus!
4. Save for buying an asset: all asset purchases need a down payment, if not a full payment! Simple – if you buy a 2-wheeler or a 4-wheeler please make a full payment. However for a house target a 40-50% down payment.
5. Save for your own education: in case you decide to do a PGPX or a PGP course you will need about Rs. 3 million. Of course you can borrow this amount, but you are much better off saving A BIG PORTION of this yourself. Reduces your re-payment burden at a later date.
6. Save for luxuries: A Canon 5-d with a nice lens costs Rs. 3 Lakhs. Or a vacation in Australia. Whatever luxuries you have in mind costs a lot of money. If you need to fund it yourself, YOU need to save money for that. Start now.
7. A sinking fund: To buy assets in the future – as a fresh one or as a new asset, create a corpus. It is always useful to do that.
I can go on and on…but these are enough for you to make a start, I hope.
Rachel
Sir, I come across articles in various magazines and websites that even small amount of investments in equities (stocks directly or SIP in mutual funds) can go a long way to creating a healthy corpus. I read last month about a director of Motilal Oswal saying that investing one lakh rupees in ITC in 1988 would have given 25
crore rupees after 25 years. It is impossible to predict the future but an article from you on this aspect or the potential that investing in stocks for the long term will
go a long way in giving us the will to carry on for long periods without selling.Thank you. Rachel
Ravi
Sir, If possible please do articles how to utilize corpus accumulated for retirement. What to do and what not to do with that corpus
V. Ramani
Practical education in finance matters is very important. A very educative and enlightening article indeed. Good Job !! Thank you.