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How to Get Started on Saving and Investing in Your Future

My grandfather always said, "A penny saved is a penny earned." To grow your wealth, you need to invest part of your income in investments that give you a high return. Over time, that's how you reach your long-term goals. 


And no matter what, spending less than you earn is the key to success. Every rupee spent should also be spent wisely, so over time, every rupee invested goes much further than a few hundred rupees saved.


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As a beginner, you need to understand how to spend, borrow and invest. Spending on essentials and utilities, borrowing money at some point, and investing to meet life goals are three areas that you need to know well. 


Here are some ways to save and spend smartly to make every rupee work to your advantage.


Start early: You need to start saving as early as possible in life. Even saving a smaller amount will not only build up a habit but also give you a headstart. The power of compounding will work in your favor over the long term and you could witness exponential growth in your savings. Do not procrastinate and start saving early as you will need a small amount compared to a larger amount if you start late.


Save, then spend: The general rule of savings is to spend what remains after you have saved out of your income. If you are spending first and then saving what is left, you need to reverse the process. So, income minus savings should be the spending.


Check bank accounts: Most of us have more than one bank account. Keep an eye on the bank statements to see if there are any charges deducted on account for different reasons. See, if they can be reversed by the bank and take action to not let banks repeat them. Also, check for minimum balance charges and take action accordingly.


Cover risks: if you have financial dependents, buy adequate life insurance preferably through a term insurance plan. Also, get health coverage for all family members. By paying a small cost as a premium towards these risk covers, you ensure that your savings are not hit when emergency strikes and life goals are not derailed for the family.


Credit card dues: If you are in a habit of rolling over your credit card dues each month, you are damaging your finances badly. The annual interest rate is close to 40 percent or even more on some cards. Further, if you do not repay in full, there is no interest-free period on your subsequent purchases. Make sure you pay the credit card outstanding amount in full by the due date to avoid late fees and other charges.


Home loan: If you already have a home loan, keep prepaying it and do not wait to end it as per the original tenure. The earlier you finish the loan, the more savings will be in interest costs. Also, keep a lower tenure if the EMI burden is comfortably met after household expenses and long-term savings.


Go digital: As far as possible, make use of digital platforms to go shopping. Be it your home needs or utility payments or even for buying life insurance. The premium of term insurance plans is generally lower by almost 25 percent than the offline version of the same plan.


Once you build up a habit of saving on small transactions and daily counts, the end result will be visible over time and you will find newer ways to keep saving more even while spending. Both things can go hand-in-hand for saving a sizable amount over the long term.

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