How to save money for future expenses?

Life is unpredictable. One day you are financially stable, and the next day, you might find yourself in a tight spot due to unexpected expenses. Maybe, a medical emergency came up, your car broke down, or you need to make last-minute travel arrangements for an event. Whatever it is, you are struggling to arrange the funds to cover it. It is a stressful situation that nobody wants to be in. This is why saving money for future expenses is important, and everyone should make it a priority.  

The habit of saving money is the first step towards financial stability. Sometimes, even small changes in your daily routine can make a significant difference in your savings. On that note, let’s go through useful ways to save money for future expenses, no matter how big or small.

• Identify between needs and wants

Needs are the things that people need to survive, such as food, shelter, and healthcare. Wants are things that make life more enjoyable but are not essential for survival, such as new shoes, monthly subscriptions or memberships. People often confuse their wants with needs and end up overspending on non-essentials. To save money, you need to spend intentionally and cut out non-essentials.

For example, if you spend Rs 3,000 on dining out every week, try cutting that down to Rs. 1,000 and saving the remaining Rs. 2,000 for future expenses. 

• Prioritise your emergency fund  

Unforeseen situations like job loss, medical emergencies, or urgent repairs can impact your long-term savings goals. Thus, it’s important to allocate some savings regularly for these emergencies. Financial experts suggest having at least 3 to 6 months’ worth of expenses in your emergency fund.

Open a savings account to keep your emergency funds. Choose a high-yield savings account with minimum balance requirements and fees, so your money can grow at a higher rate. Remember, this fund is for emergencies only, so avoid dipping into it for other expenses. 

• Open a savings account offering high-interest rate

Choose a bank that offers high savings account interest rates to maximise the growth of your savings and reach your goals faster. 

Use a savings account calculator to compare different accounts and how much interest you can earn from each. With just two outputs, which are total account balance and current interest rate, you can decide whether it’s worth opening an account with a particular bank. 

Also, check for discounts, coupon codes, and cashback offers from different types of savings accounts to leverage exclusive deals and boost your earnings. 

• Set up short- and long-term saving goals

Short-term goals include expenses like vacations or a new electronic device. Long-term goals can include saving for retirement or a house. Having specific saving goals will help you prioritise your expenses and avoid unnecessary spending. It is also a good idea to use multiple savings accounts for different goals to track your progress more easily.

To get started, compare savings accounts of different banks, their fees, minimum balance requirements, interest rates, and sign-up bonuses and rewards. This ensures you find an account that fits your needs and helps you achieve your saving goals strategically.

Ending notes

Saving is not just about putting money aside every month, it is about creating a sustainable financial plan that will allow you to reach your goals. By having a clear mindset and strategy, you can work for your targets and save for your future. More than that, it is important to remember that setbacks and impulse spending will happen from time to time. When this occurs, don’t be discouraged and use it as an opportunity to review and adjust your plan.