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Mastering the Art of Long-Term Savings: A Complete Roadmap for Financial Success
Posted on Wednesday, February 21st, 2024 | By IndusInd Bank
Saving money is vitally important for long-term financial well-being and security. However, with ever-rising costs of living and lifestyle inflation, it can be difficult to put aside a significant chunk of your monthly earnings. This article will break down the various aspects of effective long-term savings and provide a solid roadmap to help you master this important financial life skill.
Calculating Your Savings Goals and Targets
Before starting to save, it is important to list down specific savings goals that you wish to achieve over different timeframes – short-term (1-3 years), medium-term (3-7 years) and long-term (7-15+ years). Common goals could include building an emergency fund, making large purchases like a car or home, savings for retirement, children’s education, travel etc.
Set clear targets for how much you want to accumulate for each goal over what duration. For example, target ₹5 lakh emergency fund in 2 years or ₹50 lakh for retirement in 15 years. Calculating targets will make your savings more purposeful and help stay motivated throughout the journey. Revisit your goals and modify targets periodically based on your evolving needs and circumstances.
Creating a Monthly Savings Plan
Having goals and targets mapped is only half the battle won. The bigger challenge lies in the disciplined execution of a monthly savings plan to hit those numbers on time. Start by determining your net take-home monthly salary. Then categorise your expenses under essentials like rent, bills, groceries etc., versus discretionary expenses.
Aim to save at least 10-15% of your net monthly income as a habit. Automate recurring investments into appropriate instruments based on your risk appetite and timelines to take the emotion out of savings. Track spending to look for areas where you can optimise and redirect the savings towards your goals. With diligence and regular course corrections, you can ensure targets are met responsibly over the long run.
Emergency Fund – The Cornerstone of Financial Security
Building an adequately sized emergency fund should be the top-most savings priority for any individual or household. Financial uncertainties and emergencies are unavoidable realities of life. Without a dedicated corpus, you may be forced to dip into other investments or take on high-interest debt to tide over crises.
Financial experts recommend having liquid savings equivalent to at least 6 months’ worth of essential expenses in an emergency fund. Park this corpus in a savings account or liquid fund and avoid touching it except for unplanned life events. Make topping up your emergency fund one of the first savings actions every month till you achieve the six-month target. This will offer immense financial peace of mind.
Conclusion
Starting early, having clear goals, automating savings, investing wisely, managing taxes efficiently, and above all, maintaining discipline are crucial for successfully achieving long-term savings and building financial security over 20-30 years. To aid you in your saving endeavour, IndusInd Bank offers some of the best savings account offers and interest rates that can boost your returns with regular deposits. Why wait when securing your long-term financial goals is just a click away? Open an account with IndusInd Bank today!
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
