Interest on Savings Account: Everything you need to know

Earning a bonus or receiving a cash gift from a loved one can be an extremely joyous moment, especially financially. However, while you may have an urge to splurge this money instantly, some careful financial planning can be a better route to take. Knowing how to save money is essential when it comes to your financial security. This is not hard. You just have to follow some simple money investment tips.

Enjoy but cautiously

One of the biggest mistakes most people make is not being mindful when spending. Having an influx of extra money can give you a false sense of financial abundance. The additional digits in the bank account can make you spend more than you can really afford. It also gives way to impulse shopping. However, the key to being financially stable is to draw the line between essential and non-essential expenses. Try to prioritise what’s important and what isn’t and focus on saving and investing.

Have a long term investment plan

Knowing how to invest your bonus can help you in many ways. Investments help you plan ahead. They let your money grow over the years and enable you to prepare for various financial goals like retirement, higher education or wedding expenses of a child, home purchase, car purchase, and more. You can use your excess funds to invest in a long term financial plan and secure your future. Setting up a separate investment account for each of your goals can help you plan efficiently and avoid shortages.

Pay Off High-Interest Debts

Any financial progress you have made can be stalled if you are trying to pay off your debt. It can also force you to alter your standard of living. If you receive bonus money and have any pending loans or credit card debt, try to pay it off first. This will help you save money otherwise spent on interest rates.

Set Up a Retirement Account

Planning for your retirement is essential to enjoy a comfortable and financially secure old age. Once you stop working, you will have a very limited pool of money. So, the more you save now, the better life you can lead post-retirement. A savings account can be one way to save for the future. The IDFC FIRST Bank Savings Account offer interest rates of up to 7% p. a. that help your money grow. This can be ideal for an emergency fund. You can also avail of additional benefits like a free personal accident insurance cover of Rs 35 lakhs and a free air accident insurance cover of Rs 1 crore.

Additionally, you can also consider retirement accounts like the IDFC FIRST Bank Fixed Deposit with returns of up to 7.5% Fixed deposits are ideal for emergencies and long term savings as well.

Conclusion

Understanding how to use bonus money is critical to avoiding wastage and poor financial decisions. While there is no harm in enjoying the money you earn, keeping some for the future is equally necessary and helpful in the grand scheme of things. 

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.