It is important to save money in today’s time. Some problems of our life can be solved with money if we use it properly. Everyone earns money, some less, some more. However, along with earning money, people should invest money in the right place. Common man earns less money and his daily life needs are increasing day by day.
If we compare the last 30 years with the present time, then we will find that now the need of man is more than before. In the coming time, it will increase and not decrease. For this it is very important that we should think about saving money from now on. If you do not understand where we should invest, then you can also take the help of any financial advisors.
1. Financial Independence
In the 21st century, everyone lives in a free country and everyone wants to become financial free. The meaning of freedom may be different for every person. Example: Financial freedom is the situation when you have solved your problems related to money. This means that you should have enough money to meet your current and future expenses. Somebody thinks that,” if I get a job then all my problems will end.”
2. Basics of Budgeting and Saving Money
This is the first step towards financial independence. This not only gives you an idea about your spending pattern vis–vis your income but also helps you maintain discipline regarding your finances. This helps you differentiate between wants and needs. The right approach to dealing with budgeting is to segregate your essential expenses, set aside funds for them and save the balance.
While doing so, non-essential expenses should be cut. A 50:30:20 ratio is recommended when budgeting, which means 50% of your income should be spent on essentials, 30% for desires, and the remaining 20% should be saved and invested.
3. Money For Emergencies
Emergency funds are prepared for a crisis like Covid-19. Emergency funds keep money with you for times when, for example, you are unable to earn an income or a medical crisis strikes. An ideal emergency fund should be equal to at least 3-6 months of your income or ideally 6-12 months and it should be enough to meet your important financial commitments like home loan EMIs etc. With this fund you will be able to remain financially free until your regular income resumes.
4. Set Your Goal for Financial Freedom
Another important step, which may be necessary for financial independence, is setting goals. These goals are specifically related to your life and family, such as getting married, planning finances for children’s education and their weddings, buying a house, etc. When you have set your goals, set a time frame for when you want to achieve them. While doing so, stick to the ground reality.
For example, you might want to get married or buy a car in 5-7 years. Similarly, you can have a timeframe of 20-25 years for your children’s education and marriage. Once you have identified your financial goals, work towards meeting them. You can start investing in time according to your goals.
This will give you plenty of time to accumulate substantial capital through investment tools with compounding benefits. Decide on an amount to invest every month. Whenever your income increases or you have surplus money, increase that amount.
5. Earn More Money
Money can help you earn more money. Keep your career on a trajectory, and you can do this by changing your job profile or job. You can add other legitimate sources of income if possible. If you have more than one house, you can rent out the other property so that you will get cash money as monthly rent.
If part time jobs are available (they must be permitted by your current employer), you can do those too. If you have extra surplus, say 5-20 million, then don’t keep it in your savings account. Instead, invest in a place where you can get regular income when you retire or become financially independent. For example, Alphabet Inc. stocks which, along with increasing your capital, also provide useful dividends on a regular basis.
6. Invest more in a growth-oriented plan
Once you start saving, the next step is to invest in those instruments which can give you the desired results. When doing this, consider your age and risk appetite. This is where investing in good properties matters the most. This means don’t invest all your money in one place but diversify it. You can consider diverting your money to growth-oriented investment schemes.