Life is full of milestones that require us to make large cash outflows. These can include buying a home, having a baby, paying for a college education, planning retirement, and starting your own business. While these life events can bring joy and fulfillment, they also come with hefty price tags. To ensure you are financially prepared for them when the time comes, it’s important to start saving early and consistently. In this blog post, we will discuss 5 major milestones in life that require heavy cash outflows and 7 ways to save money for them in India.
Milestone 1: Buying a Home
Buying a home is one of the biggest investments you’ll ever make. In India, it’s important to be financially prepared to invest at least 25% of the cost upfront. To save for this milestone, start by opening a savings account and dedicate 5-10% of your monthly salary towards it every month. Additionally, look into taking advantage of government schemes such as Pradhan Mantri Awas Yojana (PMAY) that offer concessional loans and subsidies to help reduce your burden.
Milestone 2: Having a Baby
Having a child is an exciting life event but can also be quite expensive with pre-natal care, delivery costs, and post-natal care. To save for this milestone, start by tracking your spending and adjusting it to fit within a budget that allows you to save 5-10% of your salary every month towards baby expenses. Additionally, look into availing tax benefits through the Sukanya Samriddhi Yojana Scheme or opt for child insurance plans to safeguard the financial future of your little one.
Milestone 3: Paying for College Education
A college education is another major expense that requires extensive cash outflows. To save up for this milestone, start by setting up an account specifically dedicated to college tuition fees. Make sure to add 5-10% of your monthly salary into this account every month. Additionally, research government schemes such as the Central Scheme of Interest Subsidy (CSIS) offer financial aid to students from low-income backgrounds to help reduce the burden of tuition fees.
Milestone 4: Retirement Planning
Retirement planning is an essential part of financial planning and requires substantial cash outflows. To save up for this milestone, make sure you are contributing 5-10% of your salary every month into a pension plan or retirement savings account. Additionally, look into investing in mutual funds as they have the potential to give higher returns over a long period, making it easier to build a large corpus required for retirement planning.
Milestone 5 – Starting Your Own Business
Starting your own business can be an exciting and fulfilling life event, but it also requires a substantial amount of money. To save up for this milestone, start by creating a business plan that outlines your overall goals and how you intend to achieve them. Additionally, look into savings accounts or loans designed specifically for entrepreneurs so you can access the funds required to get started on your venture.
7 Ways to Save Money for These Major Life Events
Set up a budget
Setting up a budget is the first step towards saving money for major life events. Make sure to track your income and expenses in detail so that you can adjust your spending accordingly and make room for savings every month.
Cut back on non-essential expenses
Take a close look at your expenses and identify areas where you can cut back. This could include reducing eating out, canceling subscriptions, or taking advantage of discounts and coupons.
Automate your savings
Automating your savings is an easy way to ensure that 5-10% of your salary goes towards the milestones each month without having to think about it every time.
Invest in mutual funds
Investing in mutual funds is a great way to create wealth over time and make sure that you have enough money saved up for life’s major milestones.
Utilize government schemes
Various government schemes such as Pradhan Mantri Awas Yojana (PMAY) and Sukanya Samriddhi Yojana Scheme offer concessional loans and subsidies to help reduce the burden of major life events.
Take advantage of tax benefits
Availing of tax benefits can also help you save money for these life events since it reduces your overall tax liability.
Consider insurance
Investing in insurance plans such as child insurance or health insurance can provide financial protection in case of any unexpected medical or other expenses that crop up related to these milestones.
Conclusion
Life milestones can be costly, but with proper planning and budgeting, you can prepare for them. Saving early, cutting costs, and considering government schemes, loans, and insurance plans can help you achieve your goals. Remember, financial planning is a long-term process, and it requires discipline and patience. Start today and make your dreams a reality.