Nowadays, many working professionals, despite having a decent income, are unable to save. At the beginning of the month, as soon as the salary is credited to the account, rent, EMIs, shopping, eating out, and other expenses quickly deplete the money. The problem is not that the income is low, but the real difficulty is the lack of a clear savings plan. Until saving is prioritized, it becomes difficult for money to last.
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What is the 20 percent saving rule?
In the world of financial planning, the 20 percent savings rule is considered very effective. According to this rule, as soon as you receive your salary, at least 20 percent of it should be set aside for saving or investment. For example, if your monthly income is 40,000 rupees, then 8,000 rupees should be set aside at the very beginning. This ensures that expenses are taken care of later, and savings are secured first.
How to develop the habit of paying yourself first
Often, people think that whatever is left at the end of the month will be invested. In reality, this rarely happens. A better approach is to invest in the first week after receiving your salary. This habit gradually teaches financial discipline, and you automatically gain control over your expenses. When you have to manage the entire month with a limited amount, unnecessary expenses automatically decrease.
Why is it important to convert savings into investments?
Simply keeping money in the account is not enough. True wisdom lies in making that money earn more money in the future. For this, options like SIP, PPF, RD, and VPF are considered useful. Investing small amounts in different places reduces risk and can create a large fund in the future. The habit of regular investment provides financial stability in the long run.
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Savings are incomplete without controlling expenses
To increase savings, it is also important to curb unnecessary spending. Frequent eating out, unnecessary online shopping, excessive credit card use, and spending on luxuries can silently deplete your savings. When these habits are controlled, that same money can be invested, providing financial security for the future.