Don’t forget to save your money and invest it in proper way

Don’t forget to save your money and invest it in proper way

Can you ever imagine that you wok up in the morning and find yourself without money? It’s horrible right? In today’s world, you can’t live without money. Every day in every moment the money is most needed for you (It does not mean that money is everything). Yes, there is another side which you can’t avoid like health, family, society etc. But you can’t serve them well if you have a lack of money.

So, how can you serve them? And how can you enjoy your life without your wealth? Remember, money is such a thing you can’t leave it idle. Idle money has no power to give you all your needs.

If you spend all earning to maintain your daily needs, that will be dangerous for you. No, I don’t advise you to turn yourself in a kanjoos one. That is not the proper way to make money. You have to spend if there is a need. You can’t avoid health issues, education, refreshment, occasions etc (If you declare yourself as an “unsocial” just like me, you just avoid all the occasions. Remember, everybody will criticize you).

The answer to the entire above-mentioned question is “Save your money”. You know my friend, saving is an art. It is a regular practice. If you try to save your money in a haphazard manner then you fail.

The word “saving” is a very confusing one. You can say that after spending all needs, the balance amount is your saving. But I have already told you that idle money has no use. You can spend it but can’t create your wealth with it.

So, you must save your money I.e. balance amount in a proper way and invest it.

For a lower middle class or middle-class family, the hard earned money is everything. You can’t lose it at any cost.

Here, I just suggest you some way to save your money and invest it properly. These ways are very simple. Some of them are traditional (You can’t avoid them) and some of them are smart moves.

1. How to save your money

I already said that saving money is an art. It is a regular practice. Remember, saving is just the beginning. You must invest it. Otherwise, it has no use. Only money can bring you more money. So, you must follow a proper plan.

Only you can decide what is good planning for your saving. However, the following points are useful for this purpose.

1. a. Use Target Costing Method

Surprised! Now you think what is target costing? It is a management technique. In this highly competitive market, Companies are always tried to take some smart moves. Target costing is one of them. In this costing method, a target cost is set based on the selling price and the profit margin which they want. So, it can be like this

Target Cost = Selling Price – Desired Profit.

In your day to day life, you have to spend some money for your daily needs. Everybody needs good food, good clothes, and a sweet home i.e. Roti, Kapra Aur Makan. No, I can’t forget about health. It is also equally important but you can take a smart move for the health issue. That is Medical Insurance Policy. I’ll explain it later.

So, the formula is just set your desired saving amount for a month. Then deduct it from your earnings. The balance will be the target cost for that month.

I mean to say save first spend later. You have to decide your saving portion at the very beginning of a month. The balance amount of your earning will be your monthly expenses. At the end of a month, if there is any surplus cash-in-hand, that will be a blessing.

Every time, at the end of the month, I feel very happy if I found a little surplus money in my hand.

For example, let your earning is Rs. 20,000 per month. Now if you decide your saving will be 20% of your earnings i.e. Rs.4000, then you have Rs. 16,000 for day to day expenses. That is your target cost and desired saving amount.

1. b. Invest your saving as soon as possible

Now, you have already set your desired saving amount. Then think about investment. Saving does not mean that put your money in a box or in your wallet/moneybag. Saving means create your wealth. How can you create a good wealth without investing your money? Idle money never gives you any extra money.

Yes, extra money. If you invest your money, you will earn interest i.e. extra money.

The main point is that; invest your saving as early as possible. I mean to say just decide your desired profit and invest it at the very beginning of the month.

It has two benefits. If you invest at the beginning then you have a chance to earn interest for the entire month. Another benefit is you can’t use your invested money for any other purpose.

In my last example, the desired saving amount is Rs. 4,000. If you invest it at the very beginning, you can’t spend it anymore.

1. c. Avoid unnecessary expenses

You can save your money by avoiding unnecessary expenses. You must have control over it. Please try to avoid it. Otherwise, you can’t save your money. Ok, I know nobody can live there life without enjoyment. But it does not mean that you spend everything on that.

Occasionally a weekend family tour or a lunch/dinner in a hotel on holiday is good enough but not more than that.

1. d. Try to reduce your expenses

If you cannot avoid then try to reduce your expenses. I mean to say if there is any chance to reduce the particular expenses then you should do it. For instance, you can buy some product through online marketing. You can get a discount on your purchase.

For example, I generally purchase my baby’s diaper through By these, I can save approx Rs. 3.00 per diaper. It is not so much but if you buy regularly then it has a good impact on your pocket. And you know diaper is most important for your baby. However, you can purchase it from Amazon also. (For example, Huggies wonder pants medium size on Amazon).

Similarly, I bought last month a combo pack of 2 shoes for just Rs. 699. The offer was on Amazon. Believe me, those shoes are good to use and comfortable. (The above links are the affiliate links).

1. e. Don’t take any useless loan

You can easily buy any product through a loan from banks/financial institutions. For this, you have to pay EMI. If you take unnecessary loans to fulfill your desire so quickly, then that will create a huge burden of EMI on your head. How can you save your money if there is huge EMI?

Avoid useless loans. Only go for necessary one. And please check your ability first. If you are not capable to pay your installment then that will cause your pain.

2. Invest your saved money

An investment must be made with a proper plan. If you have millions of money then no plan is needed. Just enjoy your money. You have enough to spend.

But millions of money doesn’t come in a day. It is really hard. Only any scam can give you this quickly. Please avoid any scam. Give your effort and try to make a healthy wealth by your hard work.

So you have to invest in a proper manner. Read the following points.

2. a. Savings Account (With Auto Sweep Facility)

The savings account is a very popular bank account. Everybody knows about it.

In most of the cases, the interest rate of this account is 3.50%. Some banks offer you up to 6% but there are some specific conditions. ( Kotak Mahindra Bank offers you 6% interest on savings account. The conditions are- Earn up to 6% p.a. interest on savings account balance over Rs. 1 lakh and up to Rs. 1 cr. Earn 5% p.a. interest on savings account balance up to Rs 1 lakh and 5.5% p.a. interest on savings account balance above Rs 1 cr.)

1 crore in a savings bank account is not a matter of joke. So the best option is open an auto-sweep account. It is a combination of savings account and fixed deposit account. Any amount above the particular limit (Known as threshold limit) shall be automatically transferred to the fixed deposit account. In that case, both accounts will earn interest according to their interest rate. You can withdraw your money just like your regular transaction. When the amount goes below the threshold limit, the fixed deposit account will automatically close.

You can open two savings accounts. One with auto sweep facility and another is without that facility. You don’t touch your auto sweep account unnecessarily. In that case, you lose your interest on the fixed deposit account. Rather than use your second account for all purposes, like soaping, bill payment etc.

2. b. Fixed Deposit

From a long time, it is a very popular investment option for everyone. The interest rate of fixed deposit is varied from bank to bank. For senior citizens, the interest rate is higher than the normal rate. You can invest a lump sum amount in this account for a fixed period of time. The period may be from 7 days to 10 years, as per chart provided by bank/ post office. However, the main problem is that you can’t use your money up to the time period of your fixed deposit account.

My opinion is you can fix your money for two to five years. A fixed deposit for a long period is not a good plan. Your saved money will be locked for that period. Rather than concentrate on auto sweep account and PPF account.

2. c. Public Provident Fund

It is one of the best traditional investment options. I like it very much. Only a resident individual can open a public provident fund account. However, you can open this account on behalf of minor also. The minimum amount of investment is Rs 500 and the maximum amount is Rs 150000. The amount can be deposited in lump sum or in a maximum of 12 installments per annum.

Duration of this account is 15 years. However, the account can be extended on application made by the account holder. The extended period is one or more block of 5 years each.

The interest rate on PPF account is varied from time to time.

You can take a personal loan against the balance available in your PPF account. You can avail loan between 3rd and 6th financial year of opening your account. The loan should be repaid within 36 months.

You can repay it either by installment or by a lump sum amount. The maximum loan amount is 25% of the balance in PPF account at the end of the 2nd year immediately preceding the year of loan application.

There is no fixed interest rate on loan. The rate is 2% over the PPF interest rate. For example, if the PPF interest rate is 7.5% then interest on the loan will be 9.5%.

2. d. Recurring Deposit

It is also a very popular investment option. In this deposit account, you have to deposit a small amount every month or every quarter. You can deposit Rs 500 also.

The interest rate is based on the tenure of the deposit scheme. For the senior citizen, the interest rate is higher than the regular deposit scheme.

2. e. Investment in share market

Investment in share market is not an easy one. In the above-mentioned investment option, you have no risk of loss of your money. You will receive your interest and maturity amount on time.

But in the case of the share market, the matter is totally different. It is a risky investment. You must have proper knowledge before investment.

The risk is very high and the reward is also very high. The main important point is if you can’t understand where to invest then please don’t.

Remember, long-term investment in share market is beneficial than the day trading. So, invest in good share with proper strategy and hold for a long term.

2. f. Mutual Fund

If you have any doubt about investment in share market then you have another option. That option is a mutual fund.

You may not have much time or expertise to select proper share in the market. In that case, the mutual fund is the right choice for you. Mutual fund investment is very simple. You just have to choose a proper fund on the basis of your investment goals and make the investment.

There are three types of mutual fund-a) Equity Fund, b) Debt Fund and c) Balanced or Hybrid Fund.

Equity fund is suitable for those who can take high risk and make the investment for long term. Debt fund is suitable for those people who do not like to take more risk. It is less risky than the equity fund. And the balanced fund is a combination of equity fund and debt fund. This fund has less risk than equity fund and has high return than debt fund.

2. g. Systematic Investment Plan (SIP)

At present, SIP is a popular investment method. It is also a mutual fund investment. If you don’t wish to invest a lump sum amount, then SIP is the best choice for you. In SIP, you can make a small and regular investment per month. You can start a SIP with Rs 500 also.

(Investment in a mutual fund is subject to market risk. Before investment you have to read all the terms and conditions of that particular fund.)

3. Investment for emergency purpose

All the above-mentioned investments are for creating wealth. That is not enough for your life. You have to think about an emergency situation like the health issue. There are two types of policies which is very important in this matter. One is life insurance policy and another is a medical insurance policy.

3. a. Life Insurance Policy

I am really surprised to see that maximum people take it as a tax saving investment. Yes, if you have life insurance then you are eligible for tax deduction under section 80C.

If you think only about tax saving and creating wealth then you have no idea about the main purpose of this policy.

Man is mortal. Nobody knows what will happen tomorrow. If you are the only earning member then think about the situation of your family if something happens to you. A good life insurance policy can give you that satisfaction.

Term insurance plan is good for you. Your family will get a lump sum amount on the occurrence of an unwanted situation. In this type of plan, the amount of premium is not so high. Remember, wealth creation is not possible through term insurance.

If you want insurance for any specific purposes like education, retirement benefit etc, then the regular plan is best for you. However, in the case of a regular plan, amount of premium is comparatively higher than the term plan.

3. b. Medical Insurance

A medical or health insurance is such type of insurance that pays for medical and surgical expenses incurred by the insured person. A health insurance policy is a contract between an insurance service provider and an individual. According to this contract, the insurance company provides support to the insured person when any health issue occurred. On the other hand, the Insured person will pay a regular premium (monthly, quarterly or annually) to the insurance company.

Medicare or medical costs are rising year after year. For a common man, arranging the fund in a critical situation is not a matter of joke. Health insurance is the only way to survive in this critical situation. With health insurance, you are very much secure to handle health-related problems. This makes health insurance an important investment for an individual.

Besides above, there is another benefit of health insurance. Premium paid on health insurance is eligible for deduction under section 80D from your taxable income. It can reduce your tax burden. (You can read “Deduction under section 80D-How can Medical Insurance save your income tax”)

4. Control yourself and avoid greed.

Everybody wants to be a reach man. And it is not a bad thinking. You have the right to be a wealthy one. But my friend, one thing you must not forget. Never ever try to make your wealth through any illegal sources. If there is any such thinking, please control yourself.

Don’t make yourself a mad one for the money. Money is not everything. Yes, it has a value in our life but not more than us.

Avoid your greed. Just enjoy your life. It is so precious. Do your regular work properly and believe in the GOD. Then just watch what will happen.


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