Post Mortem

The flair for savings

By Nagaland Post | Publish Date: 2/2/2020 12:41:03 PM IST

 In today’s fast moving life, it is imperative to be prepared for the future exigencies. As we witness the increase in technology, there is increase in pace of living, more aspirations and soaring requirements. People often fall prey to commercial traps and are drawn in vicious cycle of spending and debts. They become victims of peer pressures, addictive habits or splurging behaviours. Thus, reducing the quality of living. Therefore, it necessary to understand the management of finances so that all the objectives as per the priorities are achieved to ensure a good standard of living. It is pivotal to recognise the necessary requirements of our living expenses and their priorities. Post attainment of the necessities, one should plan for future goals and thereafter, move towards the luxury spending. This requires to know the estimates of income and expenses towards different means. Often, Budgets are charted to understand the deviations and work upon the problem areas. Therefore, it is cardinal to manage the resources through Savings and working as per the Priorities. In generic terms, Savings are comprehended as reserves, collections or means, by reduction in terms of resources like money etc., for the purpose of creating assets or meeting any future expenses. Saving money can be considered the income which is not spent or is held back by reducing expenditure, to utilize elsewhere. This also provides the opportunity to find avenues for new expenses or cover impending needs. Savings can help in various situations and provide numerous benefits. This has been provided as under: • Emergency situations like medical expenses and reduce dependency in crisis. • Helps to reduce the burden of debts or Loans taken for various purposes, thus reducing the liabilities. • Helps to plan for further education as well as long term goals like retirement, marriages etc • Support during the jobless period and help in sustainable living. • Helps to manage expenses for vacation or buying desirables ( electronics, consumer goods, luxury items, new house, or new car etc) without disrupting the regular monthly expense budget. It is essential to save money by simple and realistic strategy for all short term and long term goals. Further, it is important to understand the basic essential living expenses and keep record of the same taking account of inflation. This helps to identify the non-essential splurge/ binge spending and take measures to curb the same. Also, it is imperative to devise ways to increase economies of scale like buying from whole-sale, taking full year subscriptions which gives lesser costs, taking advantages of discounts/ sale etc by organising and maintaining stock of utilities. Alongside, it is also necessary to limit our expenses while shopping and entertainment or dining out. It is important to be aware of peer pressure spending or binging habits and take control of oneself before it becomes detrimental. After analysing the means, priorities are to be decided for long /short term goals. Short term may vary from 1-3 years while more than 3 years may be considered long term goals. Allocation of savings may be done after choosing appropriate tools. The consideration of various tool options (like mutual funds, bonds, shares, fixed deposits etc) is dependent upon the decision of the risk and return expectations and hence, allocations can be done accordingly. However, it is advisable for people to consider for insurance in terms of life and health as one of their priorities due to uncertainties. Consequently, one may take help of expert to devise the customised portfolio for maximum benefit and kick-start it. It is often observed that the start of any project is a hard task and maintaining it till the end is even more harder. Hence, in order to overcome this, one must be either disciplined or set up link for automatic deduction directly from the bank account. This will help to reach the objective successfully and in shorter span of time. Further, it is also necessary to review our monthly budgets and check the progress and deviations. It will help to identify and fix the problems effectively and save time and efforts. Achieving your set goals will help to take hold of financial problems more effectively and may even inspire to set new goals for betterment of life. It will induce financial freedom with less stress and provide a sense of confidence and better decision making capacity to achieve quality living. 

Priyanka Sengar, Chartered Accountant, Mokokchung

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