In olden days parents used to give the earthen piggy bank to their children and advise them to put whatever coins they get from their relatives and create an amount which could suffice them for spending during the village fair or on birthday. This was to inculcate a habit of saving as well as making them understand the value of money and training them to become self-sufficient for meeting any future expenses. This culture has either evaporated or lost its importance because of the changing times and lifestyle of people. Savings are as important in present times as were before. We save not only for ourselves but for the nation as a whole.
Afterall what is saving? Should one wait till he has enough?. Enough is not an absolute term it is comparative.Enough will never come to those, for whom enough is too little.One should, therefore, start saving from the day he receives his first salary/income.For that, he has to plan his expenses in such a way that they are always less than the monthly salary/income.Saving is income minus expenses, and that should always be positive.How beautifully one manages this is his individual effort and skill.One can manage his expenses as he likes and at the same time, there is no limit to the quantum of expenses one can make. So one should try to cut his coat according to his cloth so as to save something for future.
There are some urgent future expenses which one has to meet such as for the education of children both primary and higher/professional, building a dream house, buying a car, marriage of daughter or son and for meeting any other unforeseen eventualities.
With the passage of time, your income/salary may increase and so will your expenses.The size of family and their needs will also increase. You have therefore to manage all this and save a suitable percentage of salary/income every month so that you can build enough portfolio to take care of all your future requirements. A proper planning in this direction can make your life easy at the time of meeting your social obligations.
At various stages of life and career, you have to face different problems but you have to manage in such a way that you continue to save regularly without any break. Following are various stages and circumstances through which one passes in life after starting his career/business.
- When bachelor you are single and can manage to cut your expenses by living as paying guest or sharing accommodation and joint mess with friends and colleagues.Please start saving from day one.Don’t wait for tomorrow as that will never come and ultimately you will get into deferring your saving plans. By continuous, regular and suitable savings you can build handsome amount to meet your future needs.The percentage of savings at this stage is the highest.
SAVING SHOULD ALWAYS BE FROM HONEST EARNINGS.DONT GO FOR QUICK BUCKS BY RESORTING TO CORRUPTION, MALPRACTICES OR SPECULATIVE ACTIVITIES.PLEASE REMEMBER ANY INCOME EARNED OUT OF HONEST MEANS IS AN AMBROSIA/NECTER AND INCOME BY DISHONEST MEANS IS LIKE NARCOTICS. YOU WILL GET ADDICTED TO IT ONCE YOU TASTE IT.THIS WILL NEVER GIVE YOU PEACE OF MIND BUT TROUBLE, TROUBLE, AND TROUBLE ONLY.
AN HONEST LIVING IS THE BEST LIVING.
- You will get married.Your income may increase depending on whether your spouse is an earning hand.your expensed will increase as now you cant afford to share accommodation and mess. Neither can you be a paying guest? Your percentage of saving is bound to decrease.
- You will have your lovely sibling/siblings and for their maintenance, you have to spend a part of your income resulting in a further reduction in percentage in saving.
- Schooling of children, higher education, professional education and meeting their needs and inspirations further reduces the percentage of savings. This is the most crucial part of your life.You have to acquire your dream house, buy a car or other items of utility and raise loans from financial institutions. You must do this to save any escalation of cost on these urgent requirements. The EMIs on such loans may take a toll on your take-home income but will not be having any effect on your percentage of savings.Interest on housing loan will be deducted from your total taxable income while calculating tax so you save a lot of tax thus increasing your net income. The amount of repayment qualifies for investment in tax saving instruments. You have acquired an asset by raising a loan for which you pay EMIs which otherwise you would have to acquire out of your savings at a later stage. EMI, therefore, is not cut on your percentage of savings.
- You may or may not be in earning service by the time your children are settled.You should be able to carry on with life comfortably and independently.Your savings, pension etc.should be enough to meet your needs.
You should always try to help and give and never expect to receive from others. Leading a simple and comfortable life should be our motto. A complex lifestyle is always troublesome and devoid of peace of mind. Following table suggests what the percentage of your savings can be at different income levels, different stages of life, the different set of locations and size of the family.
Note: Salary/income shown in the table above is net after statutory deductions such as income tax medical insurance etc.Percentage of total saving includes deductions on account of life insurance, EMIs for loans taken( excepting consumption loans), provident fund, NPS etc.