Where does your monthly salary go?

Are you saving money for your future? If you want to, you must start by opening a savings bank account.

Our lives follow an almost similar trajectory as our parents’ did before us: we get a good education, secure a job, get married and have a family, raise our children and retire in peace. These are the larger goals in life. The smaller goals are about the little things: going abroad for a family vacation, buying an expensive electronics appliance once a while, doing things for our parents.

But whether a goal is large or small, you require money to make it come true. Proper financial planning will help you create sufficient funds for the future. And the first step in this direction is taken by opening a savings bank account.

Why you need a savings account

One of the most helpful habits to inculcate is the savings one. It requires tremendous discipline and focus to save money every month, especially in the face of emergency expenses. But saving money every month holds you in good stead for the future: you can pay for a variety of needs and secure yourself against penury. Saving regularly also reduces the habit of overspending. Also, you need to deposit the saved money in a savings bank account so that you do not end up spending it by mistake and you also earn returns on it (through interest paid by the bank on the residual funds).

Start by budgeting and saving money regularly

Set six monthly targets for yourself, basis the goals you wish to accomplish. For example, if you want to take a foreign vacation in six months, find out how much the flight tickets and accommodation will cost. Now break this sum down into six parts: you must save this much money every month to achieve this target.

Similarly, you might wish to hit a certain mark in your savings so as to invest that corpus in a fixed deposit or a mutual fund. Whatever your reason, you must begin by opening a savings account.

Using the savings account

Once you open your savings bank account, ensure that you deposit a certain sum of money in it every month. Also deposit any additional money that comes your way from a gift, increment at the office or an annual bonus. But the saving must be made first, before monthly expenses get in the way. Imagine, if you start by saving Rs 5,000 per month, you will have an extra Rs 60,000 in your savings account at the end of the year.