We recommend following 60/20/20 as budget rule. Put 60% of income towards your needs 20% towards your wants and minimum 20% toward your savings. As a discipline minimum 20% should be saved of your earnings.
WHY SHOULD DISCIPLINED SAVINGS BE YOUR TOP PRIORITY?
The popular quote goes “A penny saved is a penny earned.” Our expenses will always keep us on our toes. It is the discipline with which we align our life goals to take stock of what we need to save to reach those goals that will ultimately help us achieve these goals. Without the discipline of savings, you will remain caught up in unnecessary spending and find it difficult to plan for your financial goals.
IS SAVINGS ENOUGH TO ACHIEVE YOUR FINANCIAL GOALS?
Savings is only the first step to realising your financial goals. Mere savings is just going to leave your money idle in your bank account. You need to invest this money through proper instruments for the creation of wealth, depending on your risk tolerance, to reach your financial goals. A regular plan of investment will mean that you will be stress free from financial worries as you keep moving towards your goal.
HOW CAN YOU INCULCATE DISCPLINE IN YOUR SAVINGS AND INVESTENTS?
- Prepare a monthly budget: It helps you see which expenses are recurring and mandatory to maintain your living conditions in a reasonable manner. The budget will also make you realise that there are certain expenses that can be weeded out from your monthly expenditure.
- Identify your financial goals: Putting down your goals in black and white is like a wake-up call and it will make you realise that there is no time to lose if you really intend to achieve those goals. Along with identifying your specific goals, assign a financial value to those goals and also determine how much time you have for each of the goals. Categorise your goals into short term, mid-term and long-term goals.
- Start investing: Once you know the amount you need to set aside to realize your financial goals, the most important step is to actually start investing. Consider your risk appetite before you decide which financial investments to choose. You may take the help of a financial advisor or mutual fund distributor to draw up a plan of investments for you to align with your goals and risk tolerance.
STAY INVESTED THROUGH MARKET HIGHS OR LOWS
Make sure that once you have started your investments in mutual funds, you are investing in a disciplined manner. Mutual fund Systematic Investment Plan is a very convenient way of investing in mutual funds from your regular savings. Historically, it has been seen that long term investments in instruments like Equity Mutual Fund may have the potential to provide long term returns. You can consult with your financial advisor
Disclaimer: – Mutual funds investments are subject to market risk. Please read the offer documents carefully before investing
