A savings plan is a plan which allows you to easily save your money on a monthly or yearly basis and provide you with a reasonably good interest rate. These are uncomplicated and non-risky plans with sorted terms and conditions. Therefore they are considered essential tools to achieve financial goals.
Fortunately, in India, you have numerous savings plan options, such as recurring deposits, PPF (Public Provident Fund), post office monthly saving schemes, insurance plans, etc.
6 Benefits of Savings Plan
There is no reason to rethink before parking a percentage of your earnings in the savings plan. But if you have any doubt, check out these 6 primary but incredible benefits of buying a savings plan.
1. Makes You Financially Aware
Once you start saving money, you automatically become more aware of your spending habits. You make a monthly budget and regulate your expenses to accommodate the savings amount. This brings a financial discipline that remains missing if there is no money goal in front of you.
Consider this as a habit-building exercise! You remain least affected and come out as a winner from your life’s financial ups and downs with the habit of organizing and planning your finances.
2. Offers Variety & Flexibility
You get numerous types of savings plans in India and globally as well. And there are unique benefits attached to each plan. Whether you want smaller tenure, extended tenure, high-interest rates, tax savings, or any other benefit, you get a savings plan offering you what you are looking for.
This kind of variety and flexibility provided by the savings plan makes it easy for you to reach your individual financial goal. You can also customize the terms and conditions according to your needs in many savings plans.
3. Saves Tax for You
Many savings plans provide tax exemptions. So there are duel benefits of buying savings plans. You get direct benefit as the interest rate and indirect income as tax savings. Isn’t it a win-win? Generally, insurance plans and government schemes are exempted from tax. But the rules keep changing, so quoting particular savings plans that provide tax savings currently is difficult.
However, if you do some research or ask your CA, they can tell you which current savings schemes are offering tax benefits.
4. Offers Easy Liquidity
You may need money for financial emergencies at any time. In that case, you may regret saving in a scheme that does not allow you to withdraw money between the plan tenure or cut off a major chunk as a penalty.
You need a flexible savings plan in your life till the time you don’t have exuberant money in your account to not worry about such emergencies. There are many ways given in a savings plan to partially or wholly withdraw your money by paying minimum or zero charges.
5. Provides Protection Against All Adversities
If you choose life insurance or any other insurance as your savings plan, you get 2 to 3 benefits. You earn the interest, save on tax (depending on the plan you take), and get insurance cover for yourself and your family. In case of an undesirable event, these insurance policies provide financial help to your family.
In this way, you and your family can relentlessly work towards achieving your financial goal without worrying about the uncertainties coming your way.
6. Keeps Your Money Safe
Some of the best investment plans are subjected to market risk. It means they give you sufficient returns to beat inflation. But there is an underlying risk element. Comparatively, savings plans such as recurring deposits and PPFs are much safer. They offer a fixed interest rate that is not affected by market conditions.
You can plan your long-term and short-term financial goals as there is a certainty of how much money you will get at the end of the tenure of your savings plan.
A Quick Recap
Hopefully, this article clarifies how critical a savings plan is for your financial planning. Here is a quick recap of the 6 most significant benefits of the savings plan.
- Makes You Financially Aware
- Offers Variety & Flexibility
- Saves Tax for You
- Offers Easy Liquidity
- Provides Protection Against All Adversities
- Keeps your Money Safe
What are you waiting for? Go ahead and systemize your savings by choosing a suitable savings plan.