Most of us have grown up listening to famous proverbs about saving money such as “a penny saved is a penny earned” or “save money and money will save you.” It is of utmost importance that we all save money, especially to deal with the unforeseen curveballs that life throws at us. But saving money is not enough. You need to learn how to save money and how to make your savings work for you. Only and only then you can spend your life without worrying about money. How to make your money work for you? Find out here.
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Want to save money? One trick you need to follow
If you are wondering how much money you should save every month, remember this famous quote by renowned investor Warren Buffet, “Do not save what is left after spending, but spend what is left after saving.”So when you get your salary or money from any other income, save first and then spend what is left. A little discipline in managing your finances can take you a long way.
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Saving money is not enough!
Now just saving money is not enough. Inflation reduces the purchasing power of money over time. Consider this: with inflation hovering around 6% annually, the purchasing power of Rs 1 lakh today will erode to roughly Rs 54,000 in a decade. Simply saving, though crucial, may not be enough to achieve long-term financial goals.
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How to grow your money
To ensure your money grows over the period and doesn’t lose its purchasing power, you need to invest your money smartly. Your investment should align with your financial goals. You could invest in fixed deposits government bonds or liquid funds for short-term goals.
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Only way to get inflation-beating returns
Equity is the only asset class that beats inflation over the long term. However, the higher the return, the higher the risk. You can start with investing in mutual fund Systematic Investment Plans (SIPs) as well for long-term goals.
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