Managing money is an important part of every individual’s life, which makes financial planning important to achieve an individual’s short- and long-term financial goals. When you search about investment options, you will come across various options from which a savings plan can be the most effective way to save money for your future.
Let’s understand more about how a savings plan helps you manage money and become financially independent.
Importance of Financial Planning
Here are some examples of the importance of financial planning in developing a strategy to achieve future objectives and goals, such as:
- Long-Term Financial Goals
Long-term business financial objectives typically span more than five years. These objectives could range from saving for retirement to buying a home. Savings schemes are a great tool for achieving these objectives. Furthermore, investing in a savings project can help you establish wealth over time and ensure your business’s financial security.
- Short-Term Financial Goals
You typically want to achieve short-term financial goals within the next year or two. These objectives could range from saving for a vacation to gaining off credit card debt. A savings plan can assist you in achieving these objectives by providing a consistent income stream that you tin use to cover your expenses.
Savings Plan – A Smart Investment Option
A savings plan is an investment funds option that allows you to save for the future while financially protecting yourself and your family. Therefore, it is a great tool for those quests to meet long-term and short-term financial goals. For instance, Tata AIA Savings plan is one such policy that provides numerous benefits along with the life cover and guaranteed returns.
Benefits of Savings Plan
- Regular Earnings
The insurance provides the policyholder with a regular income stream that can help meet their day-to-day expenses. It is especially beneficial for retired or on a fixed income.
- Flexibility
The plan provides options for premium payment, policy terms, and coverage. The policyholder can select the premium payment frequency (monthly, quarterly, semi-annually, or annually) and policy terminal figure (10 to 30 years) that best suits their needs.
- Guaranteed Increases
Some policies provide policyholders with guaranteed yearly additions to their savings, which helps to increase the policy’s value over time. These may be subject to policy terms and conditions. Moreover, the policyholder can also receive bonuses, only when declared by the company, which can further boost the policy’s value. A Tata AIA savings plan is one such plan that offers these benefits.
- Tax Advantages
The policy provides several task advantages under Sections 80C and 10(10D) of the Income Tax Act of 1961. The insurance premium paid for the policy is tax deductible, and the payout upon the due date or death is tax-free.
- Life Insurance
The policy provides the policyholder with life insurance, ensuring that their loved ones are financially secure despite an unfortunate event. Furthermore, the policy includes riders so such as accidental death benefits, critical illness coverage, and insurance premium waivers, which provide the policyholder with additive protection.
Conclusion
Apart from the different ways you can use savings plans to achieve your financial goals, you should also make it a point to follow some financial discipline in your everyday life. This can include carefully and gradually cutting down on some unnecessary expenses or fixing a budget for each month.
Lastly, when choosing a savings plan, it is important to ensure that you do not pick the very first plan that you come across. This is because all savings plans are different and serve various purposes. Hence, you should specifically opt for a savings plan that can align with your long-term and short-term goals.
