financial mistakes

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 common financial mistakes all start-ups make and how to avoid them

Because of lack of experience or financial knowledge, every entrepreneur is bound to make some initial and crucial financial errors.

Because of lack of experience or financial knowledge, every entrepreneur is bound to make some initial and crucial financial errors. However, these can be avoided by following some simple steps and seeking simple solutions to these problems.

Listed below are 5 common financial mistakes all start-ups make and how to avoid them:

I. Problem: Overpaying taxes

This happens because a lot of people aren’t sure about the taxes which cause mismanagement of the taxes to be paid and you end up paying extra.

Solution: In order to combat this problem, you should start keeping a track of the taxes you have paid and constantly monitor the future taxes that need to be paid. By taking these simple steps, you can save a lot of money which can be pumped into the business.

II. Problem: Spending impulsively in the initial days

Entrepreneurs tend to buy a lot of impulsive stuff during the initial days which might not be required later.

Solution: Start making a list of the things your enterprise cannot function without and spend money on buying only those things to save money.

III. Problem: Mixing business and personal finances

No matter what the situation is, your personal and professional expenditure must be separate. The money saved for your business shouldn’t be used for purchasing personal luxuries whatsoever.

Solution: Create separate bank accounts if required; one for your company and one for your personal use and never use one for the other.

IV. Problem: Incorrect hiring

Hiring the right kind of people is an art which necessary for a start-up to function smoothly which is usually not looked after by most entrepreneurs and leads to serious financial problems in terms of salary and money spent on training.

Solution: Hire an experienced human resources manager who can initiate the process smoothly.

V. Problem: Not setting clear goals

Often we tend to go with the flow and not set clear, focused goals to work upon which hampers the financial aspects as the expenditure goes haywire.

Solution: In the beginning, you must set clear goals so that you are aware of the amount you need to spend to achieve it.

4 financial mistakes every entrepreneur makes

Managing finances is important for an entrepreneur and if your money skills aren’t strong, you might encounter problems in the later phases.

Managing finances is important for an entrepreneur and if your money skills aren’t strong, you might encounter problems in the later phases. However, managing money doesn’t come naturally to everyone and most entrepreneurs end up making some crucial mistakes.

Here are common financial mistakes made by entrepreneurs:

Faulty business plan

The biggest mistake you can make after starting a business is not having a business plan. It is essential for a business to have a plan to be sure about what the goals and missions are. If the goals aren’t set properly, the whole situation can result in a chaos.

Business plans also consist of a financial plan in detail without proper breakdown of fixed and variable costs. It also states how much money is required in each quarter by the business. If the financial section isn’t made properly in the business plan, it can lead to huge crises.

Related Post: 7 Ways you can finance your new startup

Poor risk management

What distinguishes entrepreneurs from managers is the risk factor. Entrepreneurs have to undertake risks which do not have to be considered by a manager. Not managing risks properly can lead to the destruction of the company.

So, an entrepreneur needs to make sure they foresee the risks that one is likely to encounter in the future and take necessary steps to avoid the risks. Insure all your machinery, land and key employees so that if there is a bad situation, there isn’t much damage. Also, a separate amount of money needs to be set aside for risk management.

Investing in trends

In your entrepreneurial career, you will always be confused as to where to invest. However, the worst kind of investment an entrepreneur can make is by investing in trend. A trend is something which is popular currently but will die in the future and be replaced by something else. Developments in the future are sure to displace today’s developments. Thus, investing in more secure deals is a safer option than investing in futile trends.

For instance, Warren Buffet invests in roads, insurance and electricity.

Not pumping back enough in to the business

If your business is currently making profits, it is all the more reason to pump money back into the business and expand it. Some entrepreneurs let the money lie idle or invest it in banks. This won’t help your grow your business and money will just lie there.

The money can be spent on useful things like improving customer service or marketing for the company or research for a new variant or product.

Related Post: How to raise money for your startup?