Did you know that there are different types of savers? Want to know more about them? Read on.
Saving money isn’t an easy task. It takes a lot of dedication, the will to fulfil your financial goals and a long-term mindset. Otherwise, it will be very difficult to set and stick to an effective savings plan. Besides with credit being easily available to one and all, why would anyone want to go through all the torture of saving money to buy whatever they want? What’s the big deal as long as we can afford to pay the monthly bills of our Credit Card? Isn’t it?
Before you adopt this not-very-practical thinking, let us quickly tell you why it is important to save money even when it is easy and cheap to borrow money these days.
Financial Independence
For starters, your plastic mate isn’t going to make you a financially independent person. You need to build your own nest egg if you want to attain financial independence. Don’t you want to go on a vacation when you feel like? Or even retire when you want to? Well, if you want to achieve this and more, you’ll need a lot of money in your hand. You can’t do any of these if you are dependent on the monthly pay cheque.
Additional Reading: The Proven 4-Step Guide To Incredible Financial Success
Bye, Debt!
Getting out of debt is a real struggle. You have abused your Credit Card at some point in your life or you have borrowed a lot of money from your parents or friends. Well, the bottom line is that you are in a lot of debt. And, if you don’t start saving money, you are never going to end this cycle of debt in your life.
Besides, even if you choose to aggressively pay off your debts with your monthly pay cheques, you are still going to be in debt. Why, you must be thinking? Well, there is something called ‘unexpected expenses’ that can ruin your well-thought-out-but-not-very-effective plan.
However, if you had a reserve fund in place, you could have easily beaten the unexpected expenses and managed to clear your debts too. See how important savings are!
Emergency Fund
Any financial expert will first ask you to build an emergency fund. An emergency situation or a contingency can occur anytime and it can wreck your finances totally. Think about this – what will you do if you lose your job today? Or what if there is a sudden medical emergency in the family and you need to make an emergency trip?
An emergency fund will at least ensure that you have enough money to cover some expenses without having to borrow from lenders. Besides, isn’t it always better to be prepared than become a victim of such emergencies (financially, we mean)? Start saving for your emergency fund as soon as possible, if you haven’t already started. At least three to six months of expenses is what you should aim for.
Hello, Good Life!
Do you want to live a stressful life? No, right? None of us want to live a stressful life! But when you live paycheque to paycheqe and are not saving money, you are basically running from one crisis to another. If you really want to lead a stress-free, happier life in the future, you should start saving at least a portion of your monthly income, starting today.
Money can’t buy happiness (we agree!). But at the same time, if you have a nest egg for your future self to rely on when you don’t have a source of income or you are faced with an emergency, your saved money can help you get through comfortably. Isn’t that satisfaction enough?
Control Your Destiny
Do you want to control your own destiny? If you have enough money socked away, you can take control of your own destiny. For instance, if you find yourself stuck in a job that you dislike, you can quit and take time off to restore yourself even if you don’t have another job lined up. Or you may be tired of living in your present apartment and want to move to a better apartment or a nicer home. Your savings will help you with the down payment in such a case. Money may not solve all your problems, but having enough in your account can help you deal with a lot of issues. You get the drift here, right?
Additional Reading: Here’s A Simple Savings Plan For You!
Okay, now that you know the importance of saving money, let’s take a quick look at the different kinds of savers on this planet:
The Enchanter Kind
These are the guys who don’t have any control over their expenditure. Money just disappears from their pockets (and accounts) within a fraction of a second. Okay, we did exaggerate there! But you get the point right? The enchanters live in the present and they are hardly bothered about their future.
What can they do? If you are an enchanter, you should start tracking your expenses. By tracking your spending, you’ll be able to identify where all your money is going and whether those expenditures are actually necessary. This will help you make better-informed choices in the future, and maybe even start saving money.
The Salt And Pepper Kind
These guys don’t spend willy-nilly, but at the same time, they don’t track each and every expenditure of theirs also. When it comes to savings, they add a little every now and then.
What can they do? If you are the salt and pepper kind, you should set small, realistic goals for yourself to understand how savings pay off. For example, you want to buy a premium smartphone. You got to decide how much money you’ll have to save every month to make the purchase in the next few months. This cycle of saving and rewarding yourself will motivate you to save on a bigger scale. Try it and let us know if it worked for you!
The Singles Kind
Just like a batsman who loves taking singles instead of hitting a boundary or sixer, the singles are the ones who adopt a slow and steady approach towards saving money. Without fail, they put a little money aside from their paychecks every month. And just like the batsman who takes a lot of singles and adds to the total run count, the singles are successful at saving, thanks to their consistent effort.
The Sixer Kind
Unlike the singles kind, the sixer type doesn’t believe in the slow and steady approach to saving. Rather whenever they have an opportunity at hand, they put aside huge chunks of money into their savings account. Some examples of the sixer kind are the ones who put their entire bonuses into their savings account.
The Money Rock Star
These guys are good, extremely good, at managing their money. They spend carefully and never compromise on saving, ever. They strictly adhere to their budgets too. However, though this a good start to money management, they are not really good at growing their money.
What can they do? If you are a money rock star, you are already doing really well when it comes to saving money. However, it is time to step up your game. You should get the help of a financial advisor (or you could also check out our blog for tips and tricks) and start investing. Only if you invest in the right channels, you’ll be able to grow your wealth.
The Frugal Kind
These are the ones who find joy in saving money. They don’t rely on consumerism and don’t find happiness in material goods. The frugal lot consider financial security as a lifetime journey, rather than a destination they need to reach. Since they are not concerned about driving a flashy sports car or owning the latest gadgets, they tend to save a lot of money easily.
Being frugal isn’t a bad thing. But it can annoy people around you – friends, lovers, family members – especially if you become too tight-fisted. There is a thin line between being frugal and turning into Ebenezer Scrooge. So, if you catch yourself declining your friends or family every time they make a plan, you may be crossing the line and turning into a stingy person.
The Go-Getter Kind
These are the ambitious lot. They have laid down their financial goals and strive towards them. It isn’t difficult for the go-getters to save money since they are saving for specific goals and these goals keep them focussed. They are a goal-oriented lot and hence view savings as the means to reach their goals.
Additional Reading: Why Saving Is More Relevant In India Than Anywhere Else
Savings are important, especially if you are seeking financial independence. It helps you build a nest egg to rely on. Also, unless you have enough savings, you’ll never be able to fulfil your financial goals. So, start saving today!
What kind of a saver are you? Let us know in the comments section below.