Tag: Financial decisions

5 Reasons Why You Need to Get Serious About Savings Today

We have put together five important reasons why everyone should begin saving earlier rather than later in life.

We all have resolved to save seriously more than once in life. But, at the end of every month, we find ourselves rethinking our finances to keep up with our expenses and spending every last penny before we remember our resolve to save. And even though our parents’ generation loves to remind us of the advantages of starting saving early in life, it seems impossible to do.

Granted, building financial discipline to save every month is difficult, but once you begin saving regularly – it is easy to see the benefits. And that’s why it’s time to get serious about savings today. Unlike our parent’s generation, we are blessed to live in a technologically empowered world where we have several options where we can invest our saved money and earn good returns. The simplest option is to open a digital savings account, but that’s just the beginning. Explore a wide range of financial instruments that keep your money safe and secure while offering good returns.

5 Reasons Why You Should Start Saving Early to Create Wealth

Apart from the benefits of having money on hand, your savings could prove handy in an emergency or bail you out of financial trouble. We have put together five important reasons why everyone should begin saving earlier rather than later in life. We hope these reasons will inspire you to begin your financial journey on the right foot.



Save for a Secure Future

The most basic reason anyone would save money is to secure their future against unforeseen mishaps. A few decades ahead, you will not be able to go to work anymore; that day, you should have enough money saved to maintain your standard of living until the end of your days. Invest in a retirement fund and sleep easier knowing you will be cared for when you are older, click here to know more.

Compound Interest

Saving early enables you to leverage the power of compounding. In other words, the earlier you start saving and investing, the more interest you earn on your investments. Starting early also allows you to save smaller amounts to reach the same financial goals. Here’s a look at an example

Details

 X Y
Amount Invested Rs.4000 per month

Rs.8000 per month

Number of years

 35

25
Total Amount INR 16,80,000

INR 24,00,000

Rate of Return

 10%

10%
Amount at the age of 45 Rs. 1.15 Crore

Rs. 1 Crore

To Fulfill Your Desires & Aspirations

We all have things we love to do in our free time. Some people build collections of rare stamps or books, some people love traveling to new places, and some people like to pursue adventure sports. But a lot of these hobbies cost money. Even if you spend only a few hours on your passion in a week, it’s nice to have enough money to indulge in what you love. While your savings may not afford everything you want, you can do a lot if you have a bank balance. The benefit of saving money early on gives you the freedom to fulfill your desires and aspirations. To know more, click here.

Mitigate Risks in Life

When you begin saving early in life, it builds a financial support system for you and your family. Your savings act as an emergency fund that you can dip into whenever you need to spend more than your monthly expenditure. It helps make you feel secure about your financial condition and meet emergencies without taking on debt.

Correct Your Past Financial Mistakes

Most of us have faltered in our financial decisions at least once. Making mistakes at a young age prevents you from getting into huge losses. By starting to save early, you give yourself the opportunity to learn from your mistakes and correct them as you grow financially.

Financial planning teaches you to tread carefully in the face of risk and always be prepared for any contingency. Start researching your options and find lucrative avenues to invest your savings regularly. Starting to save early seems like an unnecessary sacrifice at a young age, but as you grow financially and emotionally, you will realize why savings are important. Your savings are a treasure trove that will support you throughout your life.



Author Bio: Naina Rajgopalan has a thing for numbers and a deep fascination to learn about all things finance. She’s been money-wise from a young age and has always shared her knowledge and tips with those around her. Being a part of the content team at Freo Save, a neobank that offers a 7% interest rate on savings along with benefits such as insurance on balance, safe & secure banking, and so on, Naina stays updated with the latest of what happens in the banking and fintech industries. She has taken upon herself to share her knowledge with readers across all walks of life to help them manage their finances and budgets better, so they can make better decisions while spending, borrowing, investing and saving.

5 Financial decisions to manage your personal finances if you are starting a business

Financial planning is a key cog in a company

“Financial planning is a key cog in a company”

If this saying reminded you of your company’s accounts first, then you might be looking at the picture from a wrong angle. Stick with us till the end of the article to find out why.

Often, the financial woes of the business are intricately linked to the personal monetary problems of the entrepreneur himself. For an entrepreneur, managing his personal monies well is half the battle won when it comes to managing his venture’s finances.

As someone whose expertise lies in personal finances and runs her own startup, here is my experience and learning condensed into 5 points to keep your money situation afloat if you’re starting a business.

Should we bootstrap the company or seek funding?

This is a crucial decision as it decides your company’s future cash flows. Those who bootstrap their companies witness all or most of their savings getting invested in the company. Entrepreneurs who get funded generally are able to draw out some salary from the company. But that does not necessarily make one preferred over another. While the decision to bootstrap vs funding depends on a lot of strategic factors, discussing the eventualities with the right financial planners may help you manage your personal finances better and mitigate risk over at this website.

Track your money!

You need to stay on top of your cash flow. Keep a tab on each Rupee, from where it is coming to where it is going. Once you kick start your business, you will tend to get too occupied with what the business demands. This leads to putting your own finances on the back bench. Monitoring your personal finances regularly will help you to analyze and discover ways in which you can strike a balance between your personal finances and your company finances.



Build an emergency fund

If you’re starting a business, starting without a personal emergency fund is a bad idea.

Aptly, an emergency fund should cover about 3 to 6 months of emergency expenses. You can create this fund using your current savings. This should never be invested in your business. During lean periods in your business, your friends and family may or may not be around but you can at least turn to this fund. (Unless you exhausted it which brings me to my next point).

Ensure this fund is replenished at regular intervals. Running out of it might not be such a safe idea as the unlikeliest things hit you at the unlikeliest times in a business.

Maintain financial stability

Draw a line in the sand so that you do not mix your personal finances with your business finances. Keep your personal and corporate accounts separate. This will not only allow you to save up for the future but shield you from corporate liabilities and debts.

Define a clear-cut role that you would play in the life of your business and pay yourself accordingly. Create a good financial plan for yourself. Doing this may be very tricky but you can always consult a financial planner or advisor. Many entrepreneurs are ignorant of their personal finances in this context and this usually ends up to be the ultimate reason why they go broke unexpectedly. Maintaining financial stability will protect you from liability and severe tax burden, as well as generate lucrative business leads.

Write down your financial and personal goals

Irrespective of whether your business does well or takes a longer time to get established, your life goals do not change their goal-post. If you are married with a child, you still need to plan for your child’s education. And have liquidity for those sudden medical expenses. It is therefore important that your personal goals have a Plan B in case things do not work out in your venture.

There you have it- 5 golden tips from the experts. With your personal finances organized and under control, your chances of business success will be even higher.

A successful business is all about striking a balance with your finances. Be smart, be frugal, and put your money into avenues which will lead you to the pastures green with success.

About the author:

Shruti Agrawal is passionate about helping individuals take better financial decisions and determined about embarking women on the journey towards financial independence. She pursued her bachelor’s degree from ST. Xavier’s, Kolkata in 2009 and went on to pursue an MBA in finance from the MDI, Gurgaon. She completed her CFA from the CFA Institute, USA alongside her MBA. With over 7 years of corporate experience across Strategy and Finance, Shruti found her calling in helping people get their heads around the right use for their money. At CAGRfunds, she is the brain behind the online platform and client relationship.