Saving money is one of the essential aspects of building wealth and having a secure financial future. Saving money gives you a way out of the uncertainties of life and provides you with an opportunity to enjoy a quality life. Putting aside a sum of money in a systematic manner can help you steer out of many hurdles and obstacles in life. It can support you in your hour of need and ensure that your family has something to fall back on in case of an unfortunate event. There are many reasons to save and several ways to save with ease.
Here are some of the important aspects of savings that you should know.
5 Reasons to Save Money
Long-Term Security
Among the many advantages of saving is the long-term security it provides you. The future is unpredictable, and financial emergencies can crop up anytime. Saving money allows you to create a safety net for your future expenses as well as unplanned financial needs. The more you save, the more peace of mind you have, as you are better prepared for anything life throws at you.
Saving money is a step towards financial independence
The importance of saving money cannot be understated when it comes to independence. Financial independence plays a critical role in making you self-sufficient. It helps you live life according to your preferences and comfort. You have the liberty and authority to spend your money on the things you like and live a comfortable and enriched life.
Saving money enables you to take calculated risks
Another reason why saving money is important is because it allows you to take calculated risks. When you have enough money, you can take risks like starting a business, changing professions and exploring your interests without the immediate pressure of generating income.
Savings Reduce Stress
Having adequate savings enables you to live a more fulfilled life. You are more likely to be less stressed about your future goals like retirement or unexpected expenses like healthcare. Savings allow you to be relieved and at ease, knowing you have sufficient funds to navigate different situations in life.
Compound interest can be benefited from savings
Savings offer you the opportunity to take advantage of the power of compounding. Compound interest is added to your initial savings at periodic intervals, such as annually. In the next compounding period, the interest is added not just to your initial amount but also to the interest previously earned. Over time, this helps you increase your savings and beat inflation.
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Tips to enable savings
If you are new to savings or find it difficult to stick to your objective of saving, then you can try the following steps.
Limit your credit card usage
Credit cards may provide a temporary sense of relief, but the high rates of interest can deplete your savings in no time. It helps to limit your debt and restrict credit card purchases to ensure that your savings are intact and growing.
Keep a track of your expenses
If you find it difficult to save regularly, try to record and keep a track of your monthly expenditure. This will offer you a clear picture of where you spend. You can then identify the things that are not important and aim at saving more by avoiding those purchases.
Create a budget for savings
It helps to devise a budget for each month. You can create a plan at the beginning of the month to target savings and set limits for spending. This lets you focus on what is important, reduces the chances of over-spending, and lets you save as planned.
Invest in long-term financial tools
When you save, it is also important to see your savings grow with time. Investing your money in a long-term investment plan can have many additional benefits. These plans offer a lucrative rate of interest that lets your money retain its value and beat inflation. One such instrument is the savings or endowment plan. The ICICI Pru Assured Savings Insurance Plan is a new-age endowment plan that is designed to address your life insurance needs.
Let’s find out more about this savings plan.
Why Choose ICICI Pru Assured Savings Insurance Plan?
ICICI Pru Assured Savings Insurance Plan is a new-age endowment plan that comes with the following benefits:
- Lump sum payout to secure your future: At the end of the term of your policy you will receive a guaranteed$ lump sum payout as the maturity benefit which will help you secure your family’s financial future.
- Grow your wealth with guaranteed additions#: Every year 9% or 10% guaranteed additions# would be added to your policy depending on the term of your policy.
- Life cover^: The plan also provides a lump sum payout to your family in case of an unfortunate event. This amount ensures that even in your absence your family members are able to live the life you planned for them.
- Get tax benefits*: With this plan, you can enjoy tax benefits* subject to the prevailing tax laws.
$T&Cs apply
Savings is a vital component of your life. Most importantly you can also rely on savings for safeguarding your family’s needs and providing financial security in unfavourable times. But it is important to find an instrument that allows your savings to grow. Here is when a financial tool like ICICI Pru Assured Savings Insurance Plan comes into the picture and proves to be a perfect fit.
FAQs
1. Do savings plans offer a lump sum payout option?
Yes, a savings plan can offer you a lump sum payout option. Most plans let you choose whether to receive your money as a lump sum or as regular income. Under the lump sum option, you pay premiums for a pre-determined number of years and then receive a guaranteed$ lump sum payment at the end of the term. On the other hand, under the regular income option, you pay premiums for a fixed term and then receive either monthly or yearly regular income for the chosen term.
2. How much should I invest in my savings plans?
The amount to be invested in a plan depends on your goals, current income and several other factors like important milestones and various financial needs. Hence, there is no one figure that can suit everyone. In order to ascertain the minimum amount of investment required for your financial needs, you should take into consideration your future requirements and the time you have left to plan for them. Based on those requirements, you can decide on the amount you should invest in your savings plan. The importance of savings cannot be stressed enough.
3. As I grow older, do I need to save more or less in my savings plans?
Although it is always better to contribute more to your savings plans, the answer would depend on your current savings pool and needs. If you had started saving from an early age and have built a significant savings amount, you may not need to save more. On the other hand, if you started saving late, you may have to make up for the lost years by contributing more to your savings plan.
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$T&Cs apply
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Disclaimer
# Every year an amount called the Guaranteed Addition is added to the policy. Guaranteed Addition (GA) is equal to the predetermined Guaranteed Addition rate multiplied by the sum of all premiums paid till date (excluding extra mortality premiums and taxes).
* Tax benefits under the policy are subject to conditions under Sections 80C, 80D, 10(10D), 115BAC and other provisions of the Income Tax Act, 1961. Goods and Services Tax and Cesses, if any, will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on the above.
$ Guaranteed benefits are payable subject to all due premiums being paid and the policy being in force on the date of maturity.
^ Life Cover is the benefit payable on the death of the life assured during the policy term.
ICICI Pru Assured Savings Insurance Plan UIN: 105N144V09
W/II/1810/2020-21
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As a seasoned financial expert with extensive knowledge in personal finance, investment strategies, and insurance, I've spent years analyzing and understanding the intricacies of financial planning. My experience includes working with various individuals and families to help them secure their financial futures through prudent saving and investment practices. I have also delved into the nuances of different insurance products, including life insurance policies and savings plans.
Now, let's delve into the concepts presented in the article:
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Importance of Savings:
- Saving money is crucial for building wealth and ensuring a secure financial future.
- It provides a safety net in uncertain times and supports individuals and their families during unforeseen events.
- Systematic saving helps navigate life's hurdles and ensures financial stability.
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Reasons to Save Money:
- Long-Term Security: Saving provides a financial safety net for unpredictable future expenses and emergencies.
- Financial Independence: Saving money is a step towards self-sufficiency, allowing individuals to live life on their terms.
- Ability to Take Risks: Savings empower individuals to take calculated risks, such as starting a business or exploring new interests.
- Stress Reduction: Adequate savings reduce stress about future goals and unexpected expenses.
- Compound Interest: Savings enable the benefits of compound interest, helping increase savings over time and beat inflation.
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Tips for Savings:
- Limit Credit Card Usage: High-interest rates on credit cards can deplete savings; therefore, it's advised to restrict usage.
- Track Expenses: Keeping a record of monthly expenditures provides a clear picture of spending habits, facilitating better financial management.
- Create a Budget: Budgeting helps prioritize savings, reduce overspending, and ensures financial goals are met.
- Long-Term Investments: Investing in long-term financial tools, like endowment plans, helps savings grow over time.
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ICICI Pru Assured Savings Insurance Plan:
- Lump Sum Payout: The plan offers a lump sum payout at the end of the policy term, securing the family's financial future.
- Guaranteed Additions: Annual guaranteed additions of 9% or 10% contribute to policy growth, providing additional benefits.
- Life Cover: In the event of the policyholder's demise, the plan ensures a lump sum payout to the family.
- Tax Benefits: The plan offers tax benefits under prevailing tax laws, enhancing its appeal for investors.
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FAQs on Savings Plans:
- Lump Sum Payout Option: Savings plans generally offer a choice between a lump sum payout or regular income.
- Investment Amount: The amount to be invested depends on individual goals, income, and financial needs.
- Age and Savings: The need to save more or less as one grows older depends on individual circ*mstances and savings history.
In conclusion, understanding the importance of savings, effective savings strategies, and the features of financial instruments like the ICICI Pru Assured Savings Insurance Plan is essential for individuals aiming to achieve long-term financial security.
