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The phrase "A Penny Saved is a Penny Earned" is extremely appropriate in this contemporary world. The importance of saving your hard-earned money cannot be understated. Saving money is undoubtedly one of the best financial practices any individual can adopt. According to a statistic by Firstpost, India has the highest income disproportion among prime global economies. It’s high time people need to upgrade their savings and investment habits.
Key Takeaways
Savings plans help build a disciplined habit of financial planning and future-focused investment.
They offer liquidity, wealth growth, tax benefits, and tailored support for life goals.
Choosing the right plan depends on your goals, risk appetite, and the plan’s features.
Invest early and consistently for maximum long-term benefits.
Reliable plans from Canara HSBC Life Insurance offer flexibility, security, and high customisation to match your needs.
In the present time, everyone wants to live an extravagant life, and there's no problem with that. But it’s important to realise that building financial security doesn’t always mean giving up on the good things. It simply means being intentional with your spending, focusing on what truly matters. With the right life insurance plan, you can enjoy the lifestyle you value while also creating a safety net for your future and your loved ones.
Why Do You Need to Save Money?
It may seem obvious, but people don't practice the obvious. Most of the time, we think of money as something that should be saved for the future and rightly so. Besides just investing it in the future, money's value plays a larger role in reflecting our ethics and judgements. Below are a few more reasons why one must be conscious about saving instead of focusing on spending:
Your Backup in a Financial Crisis- Money is power. In your worst financial crises, your savings can help you pay for a large hospital bill, help you avoid debt or leave a financial legacy even after you've lost the majority of your income. Savings can significantly ease financial stress during unexpected emergencies. Most financial setbacks arrive without warning, like a job loss during an economic downturn. In such times, having savings ensures essentials like school fees and household expenses are still taken care of, keeping life stable even in uncertainty.
Wings to Pursue Your Dreams- "Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver". - Ayn Rand.
This phrase says it all. Money can take you wherever you wish; it is one of the essential tools that you need to fulfil your dreams. To learn something new, to start something new, for everything you need your money and your savings can support these dreams, by making you financially stable enough to go for whatever you want in life.
All good ideas and innovations require some seed funding. At times, you may not get this funding from investors, and in such situations, to get your entrepreneurial venture off the ground, your savings can be your best support.
Long-term Security- In a country like India, where people prioritise security above everything, everyone needs to start saving money if they want to be secure in the future.
As stated earlier, your financial emergencies, medical emergencies, and life after retirement will all be covered with a simple practice of saving money. All your hard-earned money will form the backbone of your future and provide long-term security in the real sense. Furthermore, unless you are in a government job, your salary or job itself is never stable. In a hire-and-fire economy, you could lose your job at any point in time. If not that, then your salary is determined by rising and falling market forces, which can affect your retirement plan or provide a stable enough income to save for long-term security.
Saving for Fun- As stated, you don't have to sacrifice your dream luxe life for the sake of saving money and security. These savings will complement you in enjoying your life to the fullest, without any financial stress. Saving money has never been a practice to hamper your joy. It is best to keep some savings aside for a holiday if you wish to take a trip or so when you retire.
How to Save Money?
Saving money is never as simple as just cutting back on expenses. It goes much beyond that, depending on what your priorities are. An excellent way to start saving is by assessing your current spending habits and understanding how you spend your money in the first place. Redistribute your funds by making a list of your priorities- at the same time, ensure you budget each of these expenditures. For example, if your salary is ₹50,000 a month, keep aside ₹8,000 every month as savings. Put it into an FD or a long-term investment plan. The remaining funds should be allocated to cover your living expenses.
In the long run, the best way to save is by putting your savings into investment plans. If you keep your savings at home, they won't grow. However, if you keep your savings in a savings bank account, you may earn an interest rate ranging from 5% to 6% per annum. You can earn even higher benefits by entirely investing your money in a savings plan.
What are Savings Plans? Why Should You Have One?
Savings plans are life insurance plans that provide individuals with the opportunity to save, invest, and accumulate funds for their future. These plans help individuals invest systematically and with discipline, creating regular saving habits for policyholders that can yield significant returns.
You can have a savings plan with flexible optionsaccording to your needs and requirements. This type of plan is often considered one of the best in India.
There are multiple reasons why you should consider buying a savings plan:
Coverage: As a life insurance product, a savings plan offers coverage that safeguards your loved ones. A savings plan will provide financial coverage to your family after your demise. This way, you can secure your family's future even after you depart, as you will have a financial legacy for them to rely on during an emergency.
Flexibility: As mentioned before, you can tailor your savings plan as per your requirements and future goals, right from selecting the funds according to your objectives to adjusting your premium during the payment term.
Everyone has different goals and aspirations. So when you choose a typical investment, you must consider the flexible nature of a savings plan and choose a customised plan based on your future objectives and risk appetite.
Liquidity: Regardless of your policy or premium payment term, you can make full or partial withdrawals from your account after the 5-year lock-in period, in case of an emergency. This feature offers financial flexibility without disrupting your long-term goals. It acts as a safety net during unexpected expenses like medical emergencies or job loss. Having access to funds when needed ensures peace of mind and better control over your finances.
Systematic Savings: People know the benefit of saving money but they still lack the practice and knowledge of where to start. A savings plan helps develop a consistent and disciplined approach to managing finances. Beyond offering steady returns, it instills a long-term saving mindset that becomes second nature over time.
Wealth Growth: A savings plan doesn’t just help you set money aside, it also puts your money to work by investing in market-linked funds, enabling faster growth over time. With the power of compounding and consistent contributions, your wealth can multiply steadily. This makes savings plans an ideal tool for building long-term financial security and achieving future goals like education, retirement, or a dream home.
Helps Save Taxes: Since savings plans fall under the category of life insurance, they offer similar tax benefits as other life insurance policies. Under Section 80C of the Income Tax Act, 1961, you can claim a deduction of up to ₹1.5 lakh annually on the premiums paid.
Additionally, the maturity amount received is tax-exempt under Section 10(10D), provided certain conditions are met, such as the premium not exceeding 10% of the sum assured for policies issued after April 1, 2012.
Helps You Meet Your Objectives Efficiently: Savings plans are tailored to align with your future goals and financial objectives in a structured, efficient manner. For instance, some plans are specifically designed to help you systematically invest and build a corpus for your child's education or other major life milestones.
Did You Know?
According to the guidelines of IRDAI, policies like term insurance and unit-linked plans are ineligible for loans.
Source: The Hindu
How to Choose the Right Saving Plan?
Define Your Goals- Start by identifying what you want to achieve with your savings, be it your child’s education, buying a home, or securing your retirement. Categorise these into short-term and long-term goals so you can plan your investments accordingly.
Know Your Risk Appetite- Evaluate how much risk you’re comfortable taking. This will help you choose between conservative options with steady returns and market-linked plans that offer higher growth potential.
Research and Compare Plans- Once you know your goals and risk profile, explore the different savings plans available. Look into their features, flexibility, lock-in periods, interest or return rates, and terms & conditions. A well-researched choice saves you from future regret.
Choose a Plan That Aligns with You- Select a plan that suits your financial milestones and lifestyle. Ensure it gives you room to increase investments, withdraw partially if needed, and adapt to life’s changes.
Start Now- Whether you’re just starting your career or already well into it, it’s always a good time to begin saving. Choosing a reliable savings plan like those offered by Canara HSBC Life Insurance can help you stay on track, enjoy flexible features, and work steadily toward your life goals.
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Glossary
Endowment plan: A combination plan of life insurance and investment with a death benefit and an assured lump sum if you survive.
Surrender value: The accumulated amount the insurer pays to the policyholder upon termination of the plan mid-tenure before maturity.
Cash Value: The amount that builds up in a life insurance plan over time and is available to withdraw as a loan.
Credit Check: It is the inquiry and search of your credit history to check whether you can repay your debts.
Collateral: A valuable asset you agree to give to somebody if you cannot repay the borrowed money.
Conclusion
A well-chosen savings plan does more than safeguard your income. It helps you build wealth, stay financially disciplined, and achieve your life goals with confidence. Whether it’s your child’s future, a dream home, or a peaceful retirement, the right savings plan can pave the way. With flexible and trusted options from Canara HSBC Life Insurance, you can begin today and watch your money grow systematically while enjoying tax benefits and peace of mind.
Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.
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