If you are a kid earning money – say you are about 25 years of age, do you ask yourself ‘why should I save money?’
Well if you are from an Indian family, chances are you have seen the people around you save money. Your parents, uncles, aunts, neighbors, bosses, colleagues – all of them save money, right?
Still many kids these days wonder ‘why should we save money so soon in life?’. Fair enough. One girl told me ‘My parents save a lot of money and my father-in-law invests a lot of money’ – So we should enjoy, should we not? Fair enough, but all of us may not be in such a happy position.
You should save money to:
1. Have your own money: Of course your parents money will come to you, but it is nice to have your own money, right? So start as soon as possible and the money will nicely grow.
2. Create an emergency fund: what if your bike breaks down, or if there is some kind of a financial emergency, or just a friend who needs a helping hand. Nice to have your own cash to help your friend, right?
3. To start investing: I will surely do a post on why you should invest – and do it soon. However to start investing you need to create a saving corpus first. Then a portion of this can become capital of your investing corpus!
4. Save for buying an asset: all asset purchases need a down payment, if not a full payment! Simple – if you buy a 2-wheeler or a 4-wheeler please make a full payment. However for a house target a 40-50% down payment.
5. Save for your own education: in case you decide to do a PGPX or a PGP course you will need about Rs. 3 million. Of course you can borrow this amount, but you are much better off saving A BIG PORTION of this yourself. Reduces your re-payment burden at a later date.
6. Save for luxuries: A Canon 5-d with a nice lens costs Rs. 3 Lakhs. Or a vacation in Australia. Whatever luxuries you have in mind costs a lot of money. If you need to fund it yourself, YOU need to save money for that. Start now.
7. A sinking fund: To buy assets in the future – as a fresh one or as a new asset, create a corpus. It is always useful to do that.
I can go on and on…but these are enough for you to make a start, I hope.