Saving formula for different types of savers
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What should be your saving formula basis the type of saver you are

  • Highlights

  • List your needs before purchasing

  • Keep an account of your expenses

  • Grow your savings by investing a part of it

  • Set up automatic transfers and start saving smaller amounts first

The benefits of saving extend beyond just being able to provide for your needs and can also help you invest to grow your wealth over time. You can do this by investing part of your savings in a fixed deposit to gain from guaranteed returns as well as riskier options like mutual funds and equity.

Saving can help you:
- Create a cash reserve for emergencies
- Provide for your retirement
- Build your wealth and provide for yourself and your dependants
- Enjoy a better lifestyle

Saving can be difficult if you are trying to use another person’s saving success formula. This is why it is essential you find a saving technique that suits your financial behaviour. So, look at the various types of financial behaviours and what your saving formula needs to be according to the same.

1. The Thrifty Spender

With no control over your expenses, you may struggle to save because of your habit to spend. You often end up buying impulsively and thrive on credit cards and other forms of credit to pay for your day-today expenses.
The saving formula: To curb your expenses, start differentiating your needs from your wants. Each time you want to buy something, make a shopping list while striking out all your wants to a later period, with your current focus only on needs which can’t be deferred. For instance, if you want to purchase a new phone, wait for Diwali exchange offers and discount or purchase new clothing during the end of season sale.
As for savings, start by setting small and realistic goals. This will keep you motivated to reserve a portion of your income thus, inculcating a regular savings habit in you. You can also take mini steps to investing by opening a recurring deposit.

2. The Forgetful Spender

You are often unaware or forgetful about your expenses Many a times, you may wonder how you are left financially NIL at the end of the month when you have hardly made any purchases.
The saving formula: Note every purchase you make. Download spending apps on which you can record an expense as you make one. Not only does this help you to account for all your purchases, but it also helps you maintain a budget. Such record keeping will help you see you the areas where you mostly spend on and thus identify if these are actually needed. Along with making better financial choices you’ll be able to maintain a monthly budget that helps you set aside funds for saving.

Why Should you Build an Emergency Fund

3. A Regular Saver

If you think twice before making a purchase and have already perfected the habit of regularly saving, you need not stop.
The saving formula: You can take your savings one step further by finding the right investment for yourself. Analyse your financial needs and goals and invest part of your savings towards the same. Save up for a specific purpose and achieve your goals faster and in a more inexpensive manner by earning from part of your savings by investing in a fixed deposit or SIP. It is also essential you first determine your risk appetite to ensure you are choosing the right investment scheme for yourself.

4. A Lump-sum Saver

You don’t believe in saving slowly and steadily, instead you end up putting huge chunks of money inot your account. While you may think putting a corpus of funds away for saving is better than the little each month, it can become difficult to save through this manner. This is because each month may bring new or unexpected expenses that require part of the amount that you were planning to set aside in your savings account.
The saving formula: Instil a regular saving habit by starting small. You can do so by setting automatic transfers close to your salary date. This way a part of your monthly income is automatically transferred from your salary account to your savings account leaving you less prone to spending it as out of sight is often out of mind!

Now that you know how to save based on your financial habits and behaviour, start saving up for a financially independent life easily. Once you have a good reserve of your saved money, remember to invest part of the same to gain returns.

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