Savings are the cornerstone and pillars of our futures. This quote is not from anyone famous, but it does underline how important future savings are to almost anyone. Even if you’re a beginner at saving, you should focus on it at the earliest without any delays. This will help you put aside enough to combat rainy days in life and other unexpected scenarios, sudden costs, emergencies, and so on. But how do you choose the best saving plan with little money at hand? This situation is a common one, particularly for young professionals who have just joined the workforce or beginners with lower monthly incomes to save and invest.
Worry not. Here are some tips on how you can start saving today without any difficulties.
The Best Saving Plan for Beginners with Limited Funds
Beginners have several options available in terms of choosing the best saving plan for their future needs. In this case, remember that it is better to start small and let your wealth compound over the future years instead of jeopardising your finances by putting in huge amounts right away.
- Open Your Savings Account
If you don’t have a savings account, open one right away. Many people retain only their office accounts for getting salaries without having personal savings accounts. Yet, it is important since you can put your savings funds in this account after deducting other costs from your office account. Aim to keep liquid savings of at least 5-10% of your income each month. Over time, this can help you build a corpus that is at least 3-6 months of your income, which will assist you in handling sudden scenarios like emergencies or job loss. - Recurring Deposits (RDs)
This is a simple and effective way to grow your money. Put in smaller amounts each month in your RD. You can open these deposit accounts at almost any bank or post office. Once done, watch it compound and mature at the end of the tenure. Many see RDs as a safer option that provides guaranteed returns. But the truth is that they are better suited for short-term goals, not for long-term wealth creation. - Systematic Investment Plans (SIPs)
SIPs are also great ways to start building wealth in a disciplined manner. You can invest amounts as low as ₹500-1,000 each month into mutual funds and steadily grow your portfolio. SIPs also help you earn returns that can combat inflation over time. Do remember, however, that SIPs are linked to market performance and come with associated risks, so it’s important to choose funds based on your risk tolerance and goals. - Explore Government Schemes
Government-backed schemes like the Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), and National Savings Certificate (NSC) are incredibly underrated. Beginners should make the most of them. They are not only safe, but they also help you save on taxes. It’s possible under Section 80C of the Income Tax Act and is excellent for long-term savings. - Get Life and Health Insurance
A good savings plan also includes financial protection through insurance. You should consider getting a term insurance plan for pure life coverage and health insurance for emergencies. If you can afford it, push your budget to get life insurance plans with savings components, such as ULIPs. These plans offer protection with the potential for long-term savings. But you should understand the associated charges and lock-in periods before deciding.
However, these tips will be helpful only if you are consistent and disciplined in your efforts. Your money takes time to compound. You will have to be patient. But in the end, you will achieve a comfortable and secure financial future.
