Simple ways to SAVE and become RICH

Money earned is money saved. But the question we face is why to save and how to save? We try to answer the two questions in some simple ways.

Need to save

The basic question that lingers in the mind of the youth today is why do we need to save money when we are already earning a decent salary? Well, the answer is quite simple, 'Make Hay While The Sun Shines' or rather, save and invest in your youth.

Moreover, future is uncertain. We may get laid off; we might require money for medical needs, money to purchase home and car. Separately, we may require money for our future generations or to be more precise for our children for their education and other needs. You would require money to sustain in the old age wherein, the sources of income will be limited. Many organisations don't provide you with pension facilities, so after 60 how do you plan to live your life?

One can accumulate a decent sum by saving and investing a minor part of their hard earned income.

We justify the above statement with a following example:

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The two tables here (1 and 2) give two investment options and the current rates you earn on these.

Table 1 shows how your wealth multiplies if you save a fixed amount every day for 25 years.

For simplification purpose we have taken the money saved per day to be Rs 50 and Rs 100 in Table 2.

Subsequently, the table shows total money saved in a single year and corpus accumulated after 25 years. As majority of India falls in the age group of 25 to 30 the maturity period comes after 25 years.

The above tables show that, if one had saved even Rs 50 daily 25 years back, and invested the money every year in either PPF or the Sensex, the amount that an investor shall gain today is anywhere between Rs 15 lakh to Rs 1.2 crore.

If you look carefully, you can see that a small amount of money can result into a handsome amount after 25 years. This can support your retirement days by investing a minor part of your income every day! Surely, most of us generally end up spending much more than Rs 50 and Rs 100 daily.

How to save?

How about earning a million dollar salary and, still living with a debt burden? Plan your expenses properly and try to follow the following steps in order to cut your monthly spending.

Reduce your debt

Foremost thing is reduce your debt or try to repay any outstanding high interest loan at the earliest. The interest payments from the unplanned borrowing such as unpaid credit card bills can cause a big hole in your pocket. Let's say, you intend to buy a car, reduce the bulk loan amount with your savings.

Plan your expenses

Try to plan your expenses before hand.

How can you do that?

• Allocate a certain part of your salary to fulfill your daily expense
• Budget for your monthly needs
• The surplus left thereafter can be put aside to be invested into some profitable channels

Try to curtail unnecessary expenses

At times, we buy stuff that we don't really need. We could restrict some of the impulses, for the larger good, that is, towards your future needs.

Pay bills on time

Try to pay all your bills like electricity, gas, utilities and mobile and telephone bills on time to avoid late fines. The fine may seem small but in the long run these things matter.

There may be others forms of savings also but to me, these were the easiest and simplest way to save money without incurring any major moves. Try to save and then invest so that your future is always protected and you can always breathe a sigh of relief without any tension.