How much to save?

By | April 17, 2011

There is no pre defined amount as to how much an individual can save. As individuals vary, so do their incomes, responsibilities, liabilities etc, differ. The only rule that has to be followed is to save as much as you can and cut down on unnecessary expenses.

Keeping your personal requirements and your family circumstances in mind, we can arrive at a figure depending on your income. It is important to analyze any health related emergencies or accidents that can occur, so that you can set aside the required amount as a contingency fund. While the quantum is not easy to define, you can still aim to provide for the emergencies by taking adequate protection for yourself in the form of health insurance with a critical illness rider. This along with a term insurance and an accidental insurance policy will go a long way in providing you security.

Considering the amount of money that you will set aside into these financial assets, it can be estimated that at least 40% of your income should be invested. If you are young and have just started your career, even if you manage to invest Rs500 in the right mutual fund, it can help you get better returns in future. Try not to get tempted by cheap offers on home loan, car loan etc. Make sure you list out your financial requirements and save accordingly. If you have planned for you contingency as well, then hopefully there will be no need for you to get into unnecessary debt, paving way for better investment opportunities for higher returns.

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