We all love to earn, as much as we can. This is a common and very natural behavior of human beings. In fact, if we don’t feel like earning and gathering more wealth, a economy will perish and no longer exist. So, income is must for a person as well as for an economy. However, there is a saying, ‘It doesn’t matter how much you earn; what you save from your earning is all that matters’. In this context, savings is more important than income itself. In fact, it’s the ultimate earning a person or a nation earn. You earn $10,000 and spend $8,000 every month. Mr. John earns $5,000 and spends $1,000 every month. Just make the calculation – who is richer? You or Mr. John? Anyone’s guess. It’s John.
So, the fundamental rule is that you need to save more and more irrespective of how much you earn. From the above given equations, you actually earn $2,000 per month whereas Mr. John is earning $4,000 every month and at the end of the year, he will have $4,000 x 12=36,000 in his pocket. You on the other hand will be left with $2,000 x 12=24,000, even though literally you are earning more than Mr. John is.
Importance of savings
As you are a matured person, you should know that we all have financial uncertainties. At any point of time, we may meet with emergencies when we need to shell out a huge amount of cash. Where will you manage that cash from? Your income won’t be sufficient enough to meet your financial emergencies. Worse, you cannot borrow money too in the short time nor will any financial institutions will issue you a huge amount. You’ll be in a financial jeopardy. In that crunch situation, only your saved money can bail you out. Yes, your savings is the key here and can easily cover the expenses which you’d incur. Hence, give top priority to savings. Whatever earning you have, you still can save a few bucks from it. Small savings will eventually turn out to be huge asset for you. Moreover, you can earn extra on your savings in the form of bank interest or so.
How to save money
To save money, you need to have a willing for it; proper vision for it; objective for savings; and your financial planning. First, check your spending spree. Of course, you earn to spend it but do not splurge. Use the money wisely and make a budget for your income. For the savings part, contact a bank or any financial institution. Open a checking or a savings account with them. Deposit a small amount or the required amount to open the account. Take a debit card on your account. Try to open another account but try not to have a debit card for it. Deposit small amount of money from your income in the second account every month. Since you do not have a card for it, you can resist emptying your bank balance. Just keep saving as much money as you can afford taking all your expenses in mind. Soon, you will see that your account has a satisfactory money to your liking. Keep saving more and more. Else, transfer the balance to fixed deposit account or convert your account into a current account. You can also take out the money and invest it in mutual funds which is nothing but safe investment. While you have balance in you bank, you will also see interest gained on the capital balance. So, this will push you to save more. If you plan to invest a portion of the savings, you can better contact a good broker and invest the money. This will also benefit you in the long run. And all this won’t affect your lifestyle at all. Another way to both save and invest money to have a life insurance policy for you. This investment is the best I guess, as this will insure you life and your family and it’ll be huge and profitable investment.
Whatever you do, if you do not follow a budget, all your efforts will go in smoke. Do not bother how much you earn. Just try to save at least 30% of your income. You will see the fruits of it shortly.