Benefits of Starting Early Savings

Planning and proper management of finances alleviates many concerns and is of great importance in the contemporary scenario ridden by uncertainty and stress. If you know how to manage your money for the betterment of your future then you are unlikely to face any major issues in the days to come. Old people and even financial experts believe that it is better to start making your savings from a young age.

When you start paying heed to your savings from an early age then the amount of profit gained by you would be much higher than what you may get by Making Savings in the later years of your life. So, the sooner you begin your savings, the greater the advantages. To help you understand this clearly, we have mentioned a few advantages of early saving below.

Get your Money Compounded

The advantage of compounding is perhaps the main reason why you should begin financial planning at a young age of your life. The effect of compounding helps you make more money through interest rates. So, you get more profit in the form of interest when the rule of compound is used on the investments made by you.

For example, if you start investing at the age of 20 with 4000 INR per month for up to 35 years, with rate of interest as high as 10 percent, then at the age of 45 you will end up having 1.15 crore INR in your bank account as savings. On the other hand, if you even save 8000 INR per month, but for just 25 years, then at the same rate of interest, though the amount of money invested will be greater, the end result would be lesser in comparison to the last example. In this case, you will get only 1 crore INR in return. So, this is the power of compounding.

Financial Control

Financial discipline is perhaps the next reason you should consider for saving at an early age. When you begin to save money from an early age, it helps you understand the dos and don’ts of financial planning and investments. In addition, it also cultivates a positive habit in you to know the value of money and save something every month—the cumulative amount will be really helpful in future.

Learn the Basics

The investment market in current times is quite unpredictable, and for this reason, you must get the basics of investments right. The right actions will teach you how to mobilize your investments in the volatile market, in order to get better returns in the long run. In addition, when you keep your money in the market for a longer period, it also lowers down the risk associated with the same. Most people end up making awful financial decisions, particularly those who start making savings at later stages of their lives. On the other hand, when you start early, you get the opportunity to experiment with different options when the Investment amount remains considerably low. So, you don’t lose much.

Emergency

This is one of the most obvious reasons why people save money. If you start making savings at an early age, say by the age of 25, you actually work towards the bigger financial requirements that you have to confront in the future. So, instead of availing a loan from the back and end up paying huge interest, it is better to Start saving money at a young age.

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Harjot Singh Narula

Harjot Narula is founder and CEO of ComparePolicy.com, an IRDAI approved insurance web aggregator focussed on selling online insurance for companies. Harjot has more than a decade of experience in software development and has also spent 5 years in US working for the mortgage and risk management industry.

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