A rupee saved is a rupee earned. That is a very frequently quoted axiom by financial gurus all over the world. High net worth individuals may make their millions in several ways. But for the average working professional or business owner, achieving the right balance between income, expenditure and saving is the key to financial prosperity.
The idea of living within our means and setting aside money for the future is a deeply nurtured Indian trait. Unlike the western world, in India we do not subscribe to the view that “More is better” or “Greed is good”. We believe in striving for contentment, not excessive pleasure seeking. It’s only in recent years that the reliance on credit cards and personal loans to meet life’s needs has become prevalent. But we need to break free from this malaise and we can do this by setting a simple rule. That we only spend less than what we already have and save the rest. Then we can live a debt free and tension free life.
How much to save
First thought to internalize is that there is no absolute number to call as a “right amount to save”. A person earning 15K may spend only 12K per month, and thus manage to set aside a decent monthly saving. Whereas a person earning 80K per month may spend beyond his means and still be in debt! It’s the habit that matters, more than the actual magnitude of saving. The important takeaway is – not to fall for peer pressure. Never blindly assume that you aren’t earning enough, and brood over it. Just work out a financial budget and saving plan according to your earnings. And you will see a simple disciplined living style can make even small salaries look big.
A rough ballpark that experts suggest is to build a saving kitty equivalent to 6 months of your monthly expenditure needs. That can serve as a contingency fund if need arises. However, if left untouched and your saving contribution continues uninterrupted, you’ll be surprised how much money will get accumulated over the years. For instance, if you decide to make annual payments of Rs. 1,00,000 towards your PPF investment for 15 years at 7.1%, your maturity proceeds at the end of 15 years would be a whopping Rs. 31,17,276! Actually, you are only setting aside a monthly saving of around Rs 8000. But when viewed cumulatively, it grows into such a large sum.
Where to save
Start a PPF account, or a Sukanya Samruddhi Yojana in your girl child’s name. Choose a Fixed Deposit or Recurring deposit scheme in your bank. You can also create a SIP account into some well performing Mutual Funds. These are all tried and tested methods of saving. Don’t fall for any dubious schemes which offer exorbitant interest rates for your money.
If your annual salary is under Rs 2.5L then you are not liable for Income Tax. So, no need to worry about tax saving instruments. However, if your income exceeds this limit, then you can avail of deductions and exemptions prescribed by the IT rules for all the above saving instruments except Mutual Funds. Contributions up to Rs 1.5Lakhs have tax exemptions for Government Small Saving schemes.
Another ideal saving cum investment option for you will be Chit Funds. Make monthly contributions to a chit scheme, for a fixed tenure of 2-3 years. Withdraw your money at the end of the tenure with good returns, and earn in the range of 7-10%. In case of urgent need for funds, you can withdraw the entire prize money anytime during the chit scheme tenure. No penalties, no debt. It’s your own money!
Think Saving, Think Shanthala!
Shanthala Chits has been in the business of chit funds for over 2 decades now. We are a Government approved chit fund company with a 25 year successful track record and thousands of satisfied customers. Shanthala Chits is registered under the Chit Fund Act of 1982, Government of Karnataka. We are one of the most popular chit fund houses based out of Bengaluru, known for our customer satisfaction and secure investments.
Our Chit schemes range from a monthly contribution of Rs 6000 to Rs 1,00,000 to suit every budget. You can pick a chit scheme with an appropriate monthly installment for meeting several of your short-term financial needs. Our chit schemes are for a tenure of 25 Months.
Several of our customers are housewives, senior citizens and IT professionals who park their surplus funds with us as savings. Unless there is an emergency need, they do not withdraw their prize money till the end of the chit scheme tenure. So, they are able to maximize the returns gained from the schemes. A majority of them renew their investments on a continuous basis for multiple tenures. As a result, their fund growth over 5-8 years is very attractive and absolutely secure too!
Get in touch with us and start with an investment scheme. We will be glad to help you out with the right scheme that matches your needs.
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