10 Reasons To Save Money And Invest In The Future

There's a popular saying ,“Save money, and money will save you”.

What this means is that your wealth is not determined by how much you earn, but by how much you save and invest from your earnings.

Then again, savings alone won’t help you achieve your goals because of the silent thief: inflation! As per a CNBC report, Matt Rogers, Director of Financial Planning and CFP at eMoney Advisor, suggests that we should follow the 50/15/5 rule - whereby 50% of your income will tackle your essential expenses, 15% will be allocated for retirement savings, and 5% to short-term financial goals such as building emergency funds. As per Forbes, a young person can start their investing journey with 15% of their total income. However, if their goal is to reach financial freedom in their 40s or 50s, 20% of income should be invested. One of the best investments today is gold. Nowadays, digital gold has gained momentum among new age investors because it eliminates the hassle of maintaining physical gold. With indiagold, you can invest in digital gold through a very simple process.

Young people have high risk appetites, and therefore prefer risky investment avenues. However, the story may be different for a middle-aged person who wants to grow their earnings steadily but securely. Therefore, prudent investing is essential to avoid financial adversities. So let's get to it! There are numerous advantages of saving money - Here are 10 reasons why is saving important and why to save money and invest in your future:

1. Become financially independent - Save up!

Financial independence means having enough to cover all your expenses without needing to work for the rest of your life - but you cannot become financially independent if your spending = your earnings. If you want to attain financial independence, you will need to invest enough so that the ROI generated from your investments covers your expenses. Achieving financial independence is not as easy as it sounds! A lot of folks confuse becoming financially independent with investing enough money that will generate enough returns perpetually to cover your expenses. However, becoming financially independent can be a little tricky! You firstly have to set a standard of the lifestyle you want to maintain after retirement. Based on this criteria, you will be able to come to an amount that you’d require on a monthly basis to cover those expenses. You also have to make sure that the monthly income from your investments increases over time to adjust for inflation. The investments should be such that not only the returns generated increases with the inflation but also the amount invested should grow with time, otherwise you’re essentially withdrawing from your savings. So save time and money and save up and invest wisely to retire early!

2. Build assets

You need assets for two purposes: (i) To build generational wealth and (ii) To generate passive income. While passive income helps you become financially independent, generational wealth helps you become wealthy and grow your net worth. Both require investment in appreciating assets like gold, shares, mutual funds, real estate etc. Compounding reaps benefits later in life. Thus the earlier you save, the wealthier you become. Building assets become viable if you invest for the future rather than for the present! Saving for the future means investing in long term wealth generating assets which BEATS inflation in the long term. The goal is to outperform inflation by a healthy margin to increase real wealth.

3. Unforeseen emergencies

Life is uncertain. You never know when any emergency may arise and financially drain you. Therefore, it is essential to have a financial cushion. As a thumb rule, always maintain an emergency fund for up to 6-8 months so that even if your earnings stop, you can rely on the fund till the time you start earning again. Your emergency fund should be highly liquid, it can be in the form of savings deposits in your bank account, or if you want to take risk and generate returns, you can make an investment that can be highly liquid, i.e. you can liquidate it in a matter of hours and convert it into cash.

4. Purchase a house

Owning a house is still a dream for many. The only thing that’s stopping you from buying one is the lack of proper financial planning. With regular savings and investments, you can easily buy your dream house without making major compromises. If you’re planning on buying a house on loan, there are multiple ways to save money, first and foremost, take tax deductions on interest paid for home loan, secondly you can invest a percentage of the home loan EMI in a mutual fund in a form of SIP, the returns generated over time will negate the interest paid over the loan term (which is usually quite high and over 2x of the principal amount!) and lastly, you can try to pay off extra EMIs on a regular interval, this will help you bring down the loan tenure by a lot!

5. Retirement planning

A common question that a lot of people have is, how can we save money for the future? Savings become more important as you grow older. To live a comfortable & independent retired life, you need to start saving early on. Assuming you retire at 55, with a life expectancy of around 80 years, you should save enough to cover 25 years of expenses. With age, the possibility of being affected by chronic ailments also increases. This coupled with medical inflation which has been really high over the past few years, it is imperative to save money for the future. Your investments should not only cover your future medical expenses should not be the only reason for investment but also support the lifestyle you wish to maintain even after your professional life ends. Therefore, to prepare for such uncertainties, you need to raise your financial awareness.

6. Education

Pursuing higher education from reputed institutions, especially abroad, may involve heavy expenditure. Apart from fees, major expenses may include accommodation, books, travel etc. Therefore, it's important to have enough funds at your disposal to cover all these education-related costs. Considering the fact that the education inflation is rising rapidly coupled with the cost of education in great universities, it is essential to invest in the long term to make sure that you’re able to afford a good education a few years down the line. Investing regularly is imperative if you want to grow your money enough to afford a good education from a great university a few years from now.

7. Pursue your dream career

Most people slog it out at work, and don't even find what they do interesting. The fact that you might spend most of your life doing what you don't like can be unnerving. If you want to get out of the rut and shift your career, you need to have enough savings and investments to cover the initial low-income period and expenses high. Even if you want to leave your job and kickstart your own business, you need capital. All this is possible only if you maintain discipline in your savings.

8. Escape the debt trap

Only proper financial planning can save you if you're caught in a debt trap. You need to make a list of all your debts and save meticulously to get out of it. The longer you stay in the trap, the fiercer it becomes. Keep saving and start prepaying high-interest debts like credit card loans, personal loans, etc. If you maintain discipline, you will eventually come out of the debt trap. You can also go for low-interest, collateral-backed loans like gold loans to get proper financing. indiagold offers high value gold loans for customers' credit needs, from the comfort of their homes and at very affordable rates.

9. Serve society

If your goal is to bring change in this world, you can start wherever you are - but you'll probably need some finances for whatever you plan to do. Save, invest, grow and help. The more resourceful you are, the more lives you'll be able to change.

10. Travel

Come on, you knew this was coming! Everyone has a bucket list of places they've always dreamed of visiting. But very few fulfil it. If you want to go to your dream destination but have finance as an obstacle, your wait is over. With proper savings and investments, you can travel the world without worrying about finances. Start allocating a fixed part of your monthly income and invest in appreciating yet liquid assets like gold. Once you feel you've saved enough, you can liquidate your assets.

10 ways to save money!

With advancement in the finance industry and rising awareness among investors, there are now multiple avenues to save money, few of them are listed below:

1. Create an emergency fund in form of cash / cash equivalent deposits
2. Invest in avenues with fixed and regular cash flow
3. List down 5 importance of saving which will motivate you to save more
4. Have a solid savings plan - stick to it!
5. Have an investment goal to achieve your objective
6. Carve out an amount from your income that you’d be comfortable with
7. Manage your expenses efficiently - Have a plan!
8. Try to increase your savings as and when possible
9. Prioritize savings over expenses. Look up savings plan ideas and how to plan savings if you need more guidance
10. Plan what will you do with the money you save - This is a great motivator

The Bottom Line

There are various investment products available in the market. One of the most stable and preferred products, especially for us Indians, is gold investment. Gold has inherent value, and its prices have always been on the rise. During the pandemic, while markets fell, the value of gold surged. Because of its inherent value, steady returns and lower risks, gold has been a trusted savings investment channel from the times of our parents and grandparents. And this remains true even today!

With proper financial discipline and planning, you can achieve most of your goals. If you want to invest in gold, indiagold provides an option to invest in digital gold. Apart from investment, indiagold provides the most affordable gold loans, with the entire process completed within just 30 minutes.