World Savings Day is celebrated on October 30 every year in India and October 31 across the world to promote the habit of saving among people mainly through savings. The day, also known as World Savings Day, was established by the World Society of Savings Banks nearly a century ago on October 31, 1924, at the first International Congress of Savings Banks. savings in Milan, Italy. The day also aims to raise awareness about the importance of placing their savings safely in a bank rather than in their home. This year’s message is “savings can make all the difference”. It aims to raise awareness of how savings play a key role in building financial resilience and preparing to face difficult times in the future.
According to data released earlier this month by the Reserve Bank of India on Indian household savings for the financial year 2021-22, as of March 31, gross household financial savings stood at 10.8% gross domestic product (GDP) today. prices. This is a drop of more than five percentage points from the previous year, when the figure peaked at 16% of GDP. RBI data also shows that Indian families’ savings are held mostly in cash, bank deposits, mutual funds, insurance and pension funds. Household savings help families meet emergency needs and important life events such as college, marriage and retirement.
Business Standard spoke to experts Avinash Luthria, Sebi Registered Investment Advisor and founder of Fiduciaries, to find out how employees can increase their savings easily and efficiently. Here are five tips you can follow:
Try to save 50% of your salary after taxes
For young people just starting their careers or those in mid-career, experts recommend that they aspire to save 50% of their after-tax salary. “For example, if your CTC (cost to business) is Rs 100 per month, of which Rs 20 is tax, then out of the remaining Rs 80, target to keep Rs 40 aside for your savings. These savings can also include your provident funds, insurance and repayment of loans such as education loans Use the other Rs 40 to meet your needs,” Luthria said.
Experts also suggest that those who are just starting to make money should start with a smaller goal and gradually work towards the 50% goal.
Work backwards: save first, then spend
When it comes to reaching savings goals, the best way is to save first, then spend. “Remember that the equation should be ‘income minus savings equals expenses’ and not the other way around. Once you have identified your goal, figure out how much you need to set aside to achieve that goal, then manage your expenses with what’s working backwards,” Luthria advised.
He said focusing on saving first comes with its own challenges, as it requires discipline and not giving in to temptations. He said: “The sooner you accept that your savings will be your best friend on rainy days, the better. Adopt a frugal lifestyle. . You’ll thank yourself in the long run because the reverse story is scarier.”
Have a budget or think more than twice about every expense
According to experts, it is important to know where your money is going. This exercise can be a revelation because usually what you spend in a month is much more than what you expected or intended to do. They suggest making short-term and long-term budget plans. However, Luthria added that every day and every month is different for people, so the “one size fits all” approach can be impractical for personal savings. People should think carefully when making every expense.
Set up an automated backup mechanism
Experts have stated that to save money on their salary, one can easily invest in a platform that automates savings and generates good returns. Luthria said: “I’m a big fan of automating savings through mechanisms such as SIPs (systematic investment plans) for investing. It will help you stay disciplined because sometimes by making an effort conscious to set aside some of your hard-earned cash for a rainy day. Automation helps you save money without thinking about it.”
Visualize yourself as an older person
Visualizing yourself 20 to 30 years from now helps motivate you to identify savings goals and stick to them. “You can even try the readily available apps that show you what you’ll look like in the next 30 years. not to others Don’t spend on gifts and/or lend money to friends/family members often Avoid keeping cash at home.