Whether you are facing an emergency or looking to save up for the future, the importance of savings cannot be overstated. The COVID-19 pandemic has taught us that life is full of uncertainties, and you can never be sure of what the future has in store. But one thing that you can do is build enough savings so that you can tackle tough times easily.

But are you actually doing this?
 

As per a “Wealth and Well-being” survey, a whopping 90% of Indians believe that their financial health profoundly affects their overall well-being. This highlights the importance of savings and investing as they can alleviate financial stress and, thereby, contribute towards a greater sense of personal well-being.

However, the same survey also highlighted that a major percentage of Indians fail to save enough for their future. It was pointed out that nearly 50% save only 0-20%, while 20% save between 20-30% of their income. It is evident that most people are yet to understand the importance of savings.

Let us explore the benefits and importance of savings here. 

Benefits of a Savings Account

When considering the importance of savings, you also need to know where and how to save your money. Although there are several ways, you can always start by opening a savings bank account.

As the name suggests, a Savings Account allows you to park or deposit your money safely with a bank. You will be paid an interest on the amount kept in your savings account. Here are a few benefits of having a savings account with a bank –

•  A safe haven for your funds

The amount deposited in a savings account stays there unless you withdraw or transfer it to a different bank account. Keeping your money in a savings account eliminates the risks associated with cash. Nobody can withdraw money from your savings account without your approval.

• Earn interest on your savings

When your money is in a savings account, you start to earn interest. This way, your money keeps growing over time. Usually, savings account interest rates in India range between 3-5%, but some banks can provide a higher rate.

Also read - How to open Savings Account online with Metra Trust

• Value added services

The most common services that most banks offer include net or online banking, debit-cum-ATM cards, a cheque book, National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS), etc. These services allow you to make payments and transfer money on the go.

• Enables automated payments

You might have to deal with a lot of expenses each month, from utility and mobile bills to loan EMIs. Keeping track can be a tedious task. If you have a savings account, you can have standing instructions with your bank to pay all your bills on time by deducting the money directly from your account.

• Helps in filing income tax returns

When you file your Income Tax Return (ITR), you must calculate your gross income during a financial year and submit proof of this income. By using a savings account to receive all your payments, incentives, or salary, you can easily learn your annual income.

• Keep track of your transactions

Keeping track of cash expenses can be a difficult thing to do. However, when you use your savings account to make all your payments, it becomes a lot easier to track monthly expenses and transactions. This allows you to avoid overspending and manage your finances appropriately. To know your transactions during a specific period, you can download your account statement.

Reasons to keep maximum money in your Savings Account
 

If you only maintain the minimum balance in your savings account, you will not be able to extract its complete benefits. Here is why –

• Financial security

Maintaining a significant balance in your savings account is crucial for financial security. A robust savings account acts as a safety net, ensuring that you have readily accessible funds in case of unexpected expenses or emergencies. Whether it’s sudden medical bills, car repairs, or an unforeseen job loss, having substantial savings can protect you from financial instability and enable you to manage these situations without resorting to debt.

• Emergency fund

An emergency fund is an essential aspect of prudent financial planning. Keeping money in your savings account specifically earmarked for emergencies ensures that you are prepared for life's unpredictable moments. Financial experts recommend having at least three to six months' worth of living expenses saved. This fund provides peace of mind and ensures you can cover basic expenses during tough times without compromising your financial health.

• Future goals

Saving money allows you to plan and achieve your future goals, whether it’s buying a home, pursuing higher education, starting a business, or taking a dream vacation. By regularly depositing money into your savings account, you are systematically working towards these aspirations. A healthy savings balance gives you the financial foundation to make significant investments or purchases that align with your long-term goals.

• Reduce financial stress

Financial stress can have a profound impact on your overall well-being. By keeping maximum money in your savings account, you can significantly reduce this stress. Knowing that you have a financial cushion can help you feel more secure and confident in your financial decisions. This security allows you to focus on other aspects of your life without constantly worrying about money.

• Reap the benefits of compounding

Compounding interest refers to that which is earned on the interest already deposited into your account. It helps grow your money significantly over time.

• You can avoid unnecessary spending

Cash kept at home is easily accessible but can lead to frivolous spending. Hence, it is better to deposit all your money into a savings account. This way, you will learn the importance of saving for your future and can also avoid spending on things that are not necessary.

Tips to save money in your savings account
 

• Automate savings

One of the most effective ways to save money is to automate your savings. Set up an automatic transfer from your checking account to your savings account each month. By automating this process, you ensure that a portion of your income is saved before you have a chance to spend it. This method promotes consistent saving and can help you build a substantial savings balance over time.

• Track your spending

Keeping track of your spending is essential for understanding where your money goes. Use budgeting apps or maintain a spending journal to monitor your expenses. By being aware of your spending habits, you can identify areas where you can cut back and allocate more money towards savings. This practice helps in making informed financial decisions and avoiding unnecessary expenditures.

• Cut unnecessary expenses

Evaluate your expenses critically and identify areas where you can cut back. Unnecessary expenses, such as dining out frequently, subscription services you rarely use, or impulse purchases, can add up over time. By reducing these costs, you can redirect more money into your savings account. Small adjustments in your spending habits can lead to significant savings over the long term.

• Create a budget

Creating a budget is a fundamental step in managing your finances effectively. A budget helps you allocate your income towards essential expenses, savings, and discretionary spending. By setting clear financial goals and sticking to your budget, you can ensure that you are living within your means and prioritising savings. A well-planned budget allows you to track your progress and make necessary adjustments to stay on course.

• Limit your credit card usage

Excessive use of credit cards can lead to high-interest debt and financial strain. To save money, it is advisable to limit your credit card usage and avoid carrying balances from month to month. Use credit cards responsibly and only for necessary purchases. Paying off your credit card balances in full each month can help you avoid interest charges and keep your finances in check.

In conclusion
 

The importance of saving and having a savings account is clear. Thus, you can open an instant savings account with Metra Trust and earn up to 7.25% p.a. interest on your savings. With an Metra Trust Savings Account, you can also enjoy unlimited ATM withdrawals with a debit card purchase limit of up to Rs 6 lakhs and a daily ATM withdrawal limit of up to Rs 2 lakhs. For more details, click here.