Long-time investors not only acknowledge the importance of savings in an individual’s investment journey but also make it a point to inform and remind younger investors about it. In this article, we shall discuss two important foundations on which you can build your savings – a savings account that works in your favour, and budgeting. We shall also give you tips for budgeting better and shall explain the importance of a savings account in increasing your savings. Read on!

What is budgeting?
 

‘Budgeting’ is the practice of periodically accounting for all of your expenses in a given time frame. You could budget for a month, a year, or even a couple of years together. However, monthly budgeting is what most people follow to increase their savings. Let us understand budgeting by understanding the six steps of budgeting:

· Build an emergency fund
 

The first step of budgeting – prepare yourself for an emergency. An ‘emergency fund’ can help you with the extra income that you will require during an emergency. If you have a stable job, you can save money worth 6 months’ salary for a sufficient emergency fund. If you are in an uncertain job, it is considered best to have savings worth 12 months of your salary.

· Calculate your monthly income

Calculating one’s monthly income for a working professional who earns a monthly salary is easy. However, if you are someone who takes up different side jobs to complement their salary, you can calculate your monthly income by taking an average of the money earned in the past 3-6 months. 

· Factor in the additional expenses
 

If you have not budgeted before, as soon as you start budgeting, you will realise that there are a lot of additional expenses that are not accounted for. These types of expenses could include payments towards rent or mortgage, utilities including mobile phone data and Wi-Fi expenses, insurance premiums, etc.

· Focus on paying off your debt first
 

If you have debt in your name, you must first focus on paying off that debt. An accumulation of debt does no good and will always hamper your ability to save more money in the long run.

· Allot money for the ‘wants’
 

You must also account for the fun things that you might want to do every now and then. These expenses could include watching a film, taking vacations, buying accessories, etc.

· Infer learnings from your budget
 

We saved the most important point for the end. Finally, you must learn to analyse your budget and draw inferences from it to help you save more in the future. Very few mobile banking apps help you do that, and IDFC FIRST Bank’s mobile banking app is one among them. 

What is the importance of a savings account in money management?

Budgeting is aimed at helping you save more in the future by accounting for your present-day expenses. Now that you know the process of budgeting, you must also know about the importance of a savings account to help you increase your savings. Here are the reasons why savings accounts are important to help you save more and budget better:

· A bank that offers a higher rate of interest helps you save more.

· Banks with good mobile banking services help you infer learnings from your previous earnings.

· Banks such as IDFC FIRST Bank offer monthly interest credits to help you increase your savings.

· A paperless and convenient online savings account opening can help you start your savings journey faster; a service that is offered by IDFC FIRST Bank. With a high and competitive interest rate and the monthly credit of interest today it is fast becoming a choice for many who seek growth.

Tips that can help you budget well
 

In conclusion, we would like to give you three tips to budget well and account for all your expenses in any month to save more money:

1. Analyse your budget periodically by comparing it to a previous budget. If you are making a budget for the first time, start by analysing your expenses and comparing them to your monthly income.

2. Track your budget either manually through your computer or through a mobile banking app like the IDFC FIRST Bank mobile banking app that has the ‘track your expenses’ feature.

3. Stick to the plan that you have made as part of your budget. Consistency is key!

We hope you found this article on budgeting helpful. Don’t forget to opt for the right savings account to complement your budgeting journey.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.