Why Should I Start Saving Money At A Young Age
When we are young, we think about earning money to pay for all our wishes. No one usually thinks about savings as their first choice. If you start earning by the time you are in your 20s, you are not expected to think about retiring at an early age. But as you grow, you start realizing that you need saving options for securing your future.
Saving Money At Young Age
The first step in achieving financial freedom is in understanding the difference between savings and investment. If you think from a layman's perspective, investments are the amount that you will put in some instrument ( account, shares, gold, etc.) with the hope of achieving an ROI in the long/short term.
Financially, savings and investments are two different terms. We will not get into the nitty-gritty of these financial terms but understand that the goal for savings will be different than that of investments.
What are the benefits of savings at a young age?
You can choose to retire at any age that you want, only when you have enough money to live comfortably. Saving money from a young age implies having a well-balanced portfolio that has regular income. Moreover, the savings you do today can be converted into investments that yield great ROI.
Corpus For emergency
Let's assume you are 20 right now. Even if you start saving today with just Rs 2000/month, by the age of 35, you will have 15*12*2000 = Rs.3,60,000 (This is just in cash terms). If this amount is kept in any instrument like gold/FD, it adds interest/returns over the years. This amount may seem low, but do not underestimate the power of compounding. Once you start saving, you will realize that come what may, you will always be safe.
Let’s assume you invest lump sum in FD an amount of Rs.50,000(2 years of saving) for 10 years. Here’s what you get.
Similar ways, your money in gold also grows. Most importantly, you can start your gold investment journey with digigold, and every month you can keep accumulating this wealth.
Money brings financial freedom. When we save it, we reap the benefits of compounding and it gives us the chance to do what we want. Be it retiring early, starting your own business, education funds, building a family, or anything. With the right habit of saving you will achieve freedom.
Build Life skills
We start saving the day we take our birthday money and keep it in a piggy bank. Teaching a kid the concept of savings can start as early as the kid starts understanding (probably 5 years of age). Over time, they learn the virtues of patience, rational thinking, starting small, initiative, risk-taking, etc. which helps them build a solid life ahead.
Ways To Save Money At Young Age
Now that you know some of the benefits of saving money at a young age, you might be thinking, how do I start saving? What are the options available that can help me secure my financial future? Here are small steps that will help you build a saving habit.
Want to know how your future will look? It's the sum total of what you do today.
It is true for every part of your life. If you wish to have enough savings by the time you are old, start today. Some of the easy ways to get into savings mode are:
You don’t have to start with big amounts. As young people, you have limited income. Start slow. Find your daily spending and save 5%-10% of its amount. Or take a cumulative amount to save per day, per week, or even per month. But, the best suggestion is to save per day. Think about your per month goal, divide it by the number of days and you’ve got your saving habit start point.
24/48 Hour Rule
Before splurging your money on anything, wait for a minimum of 24 hours. In the age of one-day offers it might seem difficult, but be smart enough not to give in to impulsive buying. Using your money wisely is the way towards building financial wellness. If you still feel the need to buy those things after 24/48 hours, go spend. Money not spent is also money saved. Always remember that.
Save First, Spend Later
Most people build their savings corpus by saving whatever income they have after spending. The alternate way is to decide the amount you wish to save every month and deduct that from the income to find how much you can spend. (obviously, you can iterate it as per your needs every month)
Become Financially Literate
Start working on your understanding of finances. There are a lot of resources available like books, youtube, podcasts, etc. Start looking for the right spaces to learn.
Rules That Suit Your Requirements
All the above rules are not set in stone. Choose what suits you best, but to be able to save money at a young age, you need to build smart saving habits.
The next way of saving is putting your money into some instruments. You could keep it as cash, but it does not increase its value. Moreover, over the years you are not earning anything through it. Some of the best-saving instruments for saving money at a young age are:
One of the easiest ways to save money with great ROI assets is in digital gold. You can buy digital gold through various websites, like ours, and keep your money safe. As you are young, you don't have thousands to invest. With DIGIGOLD, you can start with an amount as low as you wish, and get gold stored digitally. It’s a great way to save for young people. Once you have accumulated enough, you can even convert it into physical gold.
Savings Bank account
Savings accounts in your bank can be mixed together with gold to build a strong portfolio for savings. The returns on bank accounts are low & doesn’t beat inflation, which is why it's not suggested to keep all your savings in one place.
Fixed deposits and recurring deposits are good ways to start slow and build a monthly saving habit. They also have a fixed return, which is why they cannot be used all alone.
There are various schemes that the government runs for people to invest and save. Look for saving schemes that you can use. There are many schemes that especially women can benefit from.
It is important to save money from a young age. You might look for reasons to save money in gold or other instruments, but reasons alone are not enough. We hope these small tips will help you build a strong future ahead.
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