Savings is the portion of income not spent on current expenditures. Because a person does not know what will happen in the future, money should be saved to pay for unexpected events or emergencies. For example, an individual’s car may break down, their dishwasher could begin to leak, or a medical emergency could occur. Without savings, unexpected events can become enormous financial burdens. Therefore, savings helps an individual or family become financially secure.
The saved money could also be used to purchase expensive items that are too costly to buy with monthly income. For example, buying a new electronic device, purchasing an automobile, or paying for a vacation can all be accomplished by saving a portion of your income.
How much saving should be done?
Considering an unexpected time may come at any time, a person must be financially secured. A desired amount of saving could be one to two years of expenses. For example, a home with Rs 50,000 per month in expenditures should have at least Rs 6 Lakhs in savings (Rs 50,000*24 months). Further, some additional amount should be saved for unexpected medical emergencies. This desired saving should be adjusted per the running inflation rate and changing life situations,