Saving is intrinsic to existence. We know that Squirrels hoard nuts during autumn so that they have enough food to last them through Winter. When it comes to the Psychology behind saving, it is probably as pedestrian as that. Except for us humans, there are more layers to it.
Eons ago, Economist John Maynard Keynes, stated that the wealthier the people became the more they saved, rather than consuming it. Why is that so? Because, apart from the preliminary reason to save which is to protect yourself from unforeseen circumstances, you can also save to maximize your savings.
With an avenue of motives one should consider to save, let us understand the various reasons one should save for:
Essentially, the word ‘save’ instills a sense of security and hope in us. As when you save, you’re building a refuge for yourself from life’s plausible uncertainties. You are safeguarding your future self. It is all about stacking chips for a rainy day. Because when you save, you can weather any financial storm and be absolutely certain that you are thinking about long-term security.
They say that the first million is the hardest to make. Once you do, it is all about unlocking the power of compounding. For instance, let’s say that you follow the 50/30/20 rule when it comes to saving. Where you set aside 50% of your income for needs, 30% of your income for your wants/discretionary expenses, and 20% of your income goes to your saving pot. Before you make your first million, the value of that 20% is much lower compared to 20% of your million. The meteoric rise in the value of the increasing 20% is what compounding is all about. It is about harnessing and achieving exponential growth. So invest to leverage the potential of your savings.
Saving bolsters your mental tenacity. It is easy to spend, it is easy to succumb to our whims and fancies at the cost of our expense. But, to withhold, to resist, to curtail does not come easily or naturally to us. Hence, it should be developed. This habit can be perpetuated, only when you can discipline yourself. Also, it is advocated to save right from early on as it only gives your money, more time, and potential to grow. Now you understand why your parents got you that piggy bank when you were a kid. Don’t you?
When it comes to maximizing your savings, Risk is a factor you should consider. Mindful Saving is about cautiously maximizing your returns on your investment. We’re all aware of the fluctuations in the Crypto, Stock, and Gold markets. So you can consider investing in chit funds.
It is basically a pool of money that can be created by investing a fixed amount as low as Rs 2,000, month on month. This type of investment not only gives you an Interest of 10% on your investment but also gives you fixed dividends every month. In case of an emergency, you can even bid and take the entire pool of money at no extra interest.
This gives Chit Funds an edge as it can simultaneously become your investment or your emergency fund based on your needs. You can start your savings journey by investing in myPaisaa.
So remember, you owe it yourself to save; to manage your personal finance with scrutiny. Save mindfully and sustainably!