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  • Category: Miscellaneous
    Points:7

    How much a person should save?

    Many people today believe in earning more, and spending more, and do not bother much for savings for rainy days. We are seeing this tendency, particularly in the youth today. I remember earlier people were very conscious about savings and as a rule of thumb tried to save at least 30 to 40% of their earnings. Many people who had low earnings lived a simple life and tried to save even in that condition.

    What is your perception of savings in our lives? How much a person should save? Please share your valuable experiences in this regard.
  • #777258

    Points:8
    When we have energy and when we are young, we can work hard and we can earn. But as we grow old, our energies will come down and our earning capability will come down. Some government employees may be getting a pension after retirement and that will be sufficient for them to take care of their expenses. However, there is no pension facility for employees in the private sector. EPF pension is very low and not sufficient for making a living. In this backdrop, the necessity of saving is very high. Some people think that they can spend money as needed and the remaining can be saved for later expenses. But it is always better to keep either 10% or 15% of the income separately for saving and planning the expenditure from the remaining balance. That way PF and PPF are good options. Your employer will deduct directly from your salary and pay for PF. You can advise your bank to transfer a certain amount from your salary account to your PPF account. That will be a good saving. One should think of savings as mandatory but not as optional.
    drrao
    always confident

  • #777262

    Points:5
    The author has asked a very pertinent question regarding the habit of savings. If this habit is inculcated at earler stage, it could benefit him substantially by way of getting a corpus of a large amount over a period of time. Savings are function of the quantity chosen, the time period of blocking money and the rate of interest. Hence the real benefit lies in staying invested in some mutual funds offering a matchable find in the long run.
    There are people having different opinions advancing a plea that the money saved would not translate to a handsome amount because of the inflation factor which would ultimately dilute the money value.
    I would not contradict to their opinions but a regular parking of money in such a mode would definitely a large corpus if the instalment amount and the duration are allowed for the considerable days and that too in a debt mutual fund.

  • #777267

    Points:5
    In our Indian society and culture we become aware of making savings since our early childhood and our family members will be telling about that aspect time and again until it sets in our mind firmly. In middle class family the life moves around savings only. People search new ideas of saving. They will find out the shops and other places where commodities are available in minimum prices. The kirana shop which gives us discounts and schemes is our favourite place. So our mindset is already built for savings.
    The main expenditure for which people generally save are house, marriage function, and some other ambitions.
    In my view most of the people will be saving at least 20% to 30% of their earnings. It is also true that some young people today do not believe in that and spend almost all their earnings but after a few years they also realise the importance of savings in their lives and start saving.
    Thoughts exchanged is knowledge gained.

  • #777296

    Points:10

    The answer to the question How much a person should save depends on the answer to the two questions to be answered by that particular individual- 1. How much income one has 2. How much essential spending one needs.

    Though there are some thumb rules, it all depends on the individual's income and essential needs.

    The money that is left after spending on essential needs is the total money available for saving and other spending. So the first assumption is that there is some money left after spending on essential, unavoidable expenses. Money for savings is generated by curtailing or deferring some expenses.

    The most important thing is: One should first start saving and make savings a habit. Let it start as a trickle- a small amount and slowly increase after watching one's expenses. One can start saving even penny by penny and see it grow.

    In the present day I think it is generally possible for one to save 10% or 20% of his income.


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