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Effective money saving plans for future

dateKnowledge Centre Team dateJanuary 28, 2021 views112 Views
Effective money saving plans for future

Money is one of the important aspects of a fulfilling life. Saving money is one of the best habits of wealthy people. You must save first and spend afterwards. Start investing in life insurance plans for you and your family’s future. There are a wide variety of plans to suit your financial goals. You can also customise your plan according to your financial needs.

Why Save Money for the future?

Life uncertainties are inevitable. Any emergency may arise in the future that may deduct a surplus amount of money from your pocket and thus, preparing well in advance to tackle such problems is necessary. It is becoming increasingly important to save money. Here are some of the important reasons why saving money is becoming crucial nowadays-

  • Gives Protection- Saving money for the future gives you protection against unexpected circumstances, with each penny saved, you ease a moment of your future. Money plays a vital role in an individual’s life, be it poor or rich; no one knows what will happen the next day. Even if you lose your job but have savings, you can survive while looking for another job. Savings work when you don’t work.
  • A Debt Free Life- Savings help achieve goals and help pay off the mortgage early and live a debt-free life. Living life below your means can give you plenty of room to save. Through savings, one can also pay down debt from friends, family, or even other lenders. The bigger the amount saved, the earlier you can achieve a debt-free life.
  • Early Retirement- Most of the savings plans are retirement plans where one saves money to invest in life after retirement. People saving early can end up retiring early. Putting savings to retirement funds is a pathway for a stress-free future.
  • Improve Financial Being- A saving habit will indeed improve your life. It also avoids you from debts, overspending, resisting the temptation to spend on expensive and useless things, reduces the stress of thinking of your financial obligation and financial struggle.
  • Start Investing- After a good amount of money is saved, you can immediately start investing. You can also try buying stocks with your savings. Let your money make more money for you.

Best Money Saving Plan for Future

Choosing the best money-saving plan is essential. One should look for a plan that offers maximum returns with minimum risks. Only after proper analysis and research, you should finalize a money-saving plan. Here are some savings schemes offered by the government, financial companies, and banks that encourage investors to invest more and earn high returns.

S. No. Savings Plans Interest Rate
1 National Savings Certificate 7.9%
2 Senior Citizen Savings Scheme 8.5%
3 Recurring Deposits 6-7%
4 Post Office Monthly Income Scheme (MIS) 6.6%
5 Public Provident Fund (PPF) 7.1%
6 KVP (Kisan Vikas Patra) 7.6%
7 Sukanya Samriddhi Yojana (SSY) 7.6%
8 Atal Pension Yojana N/A
9 Employee Provident Fund (EPF) 8.6%
10 Pradhan Mantri Jan Dhan Yojana 2% above base rate not exceeding 12%

National Savings Certificate (NSC) is a fixed income saving plan that can be opened with any post office in India. This money-saving plan is an initiative of India's government to encourage investors mainly from small or mid-income categories to invest their money while saving on income tax. It is a low-risk investment and gives fixed returns. The money investor must have a minimum of 18 years of age, and for a minor, a joint account can be opened with an adult. One main advantage is that there is no limit on the maximum number of NSCs that one can purchase. An investment up to Rs. 1,50,000 annually in this plan can earn a tax break, as per Section 80C of the Income Tax Act. The investor can even nominate a family member for the saving plan, even if they are minor. NSC savings plan is free to open by anyone except Hindu Undivided Families (HUFs), trusts, and non-residents Indians.

Senior Citizen Savings Scheme- It is an excellent tax saving investment plan. It offers its investors very high safety, regular income. This savings scheme is available through post offices and verified banks across India. It is for senior citizens aged at least 60 years, although individuals between 55 to 60 can also invest if they have chosen the Voluntary Retirement Scheme or Superannuation. The investment should be made within a month after receiving the retirement benefits. There's also an option of investment for retired defence personnel ages 50 or above. In SCSS, tax deduction up to Rs. Investors can claim 1,50,000 as per Section 80C of the Indian Income Tax Act. It is one of the safest and reliable schemes since it is under the sponsorship of the Indian government.

Recurring Deposits (RD)- It is a term deposit offered by banks. This money-saving plan requires regular deposits and at the time of maturity, generates huge returns. Individuals have the freedom to choose the period, the amount, and the number of monthly deposits as per convenience. It is one of the savings plans where mid-term and premature withdrawals are not allowed, and if anyone requires an early withdrawal, the bank may charge a penalty. It offers high rates of interest for senior citizens, and it can also be used as collateral for taking loans. The main drawback is that the monthly amount you decide cannot be changed, and thus, you need to have a steady income source to opt for their saving plan.

Post Office Monthly Income Scheme (MIS) is a low-risk monthly income scheme where a small amount is invested, and an interest is paid monthly. It also generates a steady income while the money invested is completely safe until it matures since the Government sponsors the scheme. You can either withdraw the amount or invest again in the scheme after the maturity period is reached.

KVP (Kisan Vikas Patra)- A money-saving plan by the Indian Post Office, under which invested money is doubled in 100 months. The minimum investment required is Rs. 1000. This plan was first implemented to uplift farmers and was open for only them, but now it is available to everyone. This plan is not subject to market fluctuations and thus offers guaranteed returns. The returns are taxable. However, TDS is exempt from withdrawals after the maturity period.

Public Provident Fund- It is the safest and most popular government-backed savings option in India. The PPF benefits are payable in lump-sum form or up to 12 deposits per financial year. It is a flexible savings option as one can also transfer the PPF account from one post-office or bank to another.

Sukanya Samriddhi Yojana (SSY)- A saving scheme introduced by the Indian Ministry of Finance, specially designed to secure the girl child's future. One can open the SSY account at any authorized bank or post office in India. It is highly flexible since the account can be transferred from one post-office or bank to another within India.

Atal Pension Yojana- A money-saving scheme initiated by the government specially designed for the welfare of the weaker section of the society. This yojana or scheme provides people with a monthly income when they are no longer earning. The subscriber is eligible to get the tax benefit for the contribution, up to a ceiling, and even for the investment returns on such contributions. A subscriber is eligible for only one individual account.

Employee Provident Fund- It is one of the popular saving schemes launched under the government of India. Its main aim is to build a sufficient retirement corpus for an individual. Under this scheme, both the employee and employer have an equal contribution towards the employee provident fund. Also, the contributions made in the Employee Provident Fund are exempt from tax.

Pradhan Mantri Jan Dhan Yojana- A scheme that is more concerned with providing access to various financial services including remittance, credit, insurance, pension, banking savings & deposit accounts under affordable rates. Under this yojana, both the urban as well as rural areas are covered. No minimum balance is required to open an account under this yojana.

Saving money for the future is very important. The money-saving plan is also a source of wealth creation. You must have in-depth knowledge of the different savings plans and schemes available in the market as most of these schemes are subject to market risk. A suitable plan or scheme's choice depends upon financial objective, time-period, risk level, return rates, etc. A money-saving plan is the passive way of saving money to achieve your life desires and maintain a fulfilling life after retirement. Saving money is the need of the time, and it indeed is very useful in the future to you and your family.

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Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 70 years of age.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

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Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while buying Term Insurance?

  1. 1. Amount of premium you have to pay based on your age, habits, education, and monthly income
  2. 2. The total number of benefits covered in the term plan. Do they include benefits that you care about the most?
  3. 3. How to save money on tax if you pay for the term plan?
  4. 4. Do they offer regular income options?
  5. 5. Can you change the coverage and premium in the future?
  6. 6. Does the claim consider valid if death occurs outside India?
  7. 7. Which kind of death is not covered by insurance?
  8. 8. Can NRIs take term insurance? If yes, what are the conditions?
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