Summary of this article
Automating savings on payday can build a consistent saving habit
RDs suit predictable cash flows; sweep-in accounts offer flexibility
Saving Rs 3,000–5,000 monthly can be a practical start
Keep three to six months of expenses for emergencies
For salaried individuals earning below Rs 10 lakh annually, saving regularly starts with deciding what can leave the salary account each month. Waiting until month-end means savings compete with every other expense.
Set up a transfer for payday, after working out how much you can spare each month. Before choosing where to put it, check whether you can withdraw the money when you need it.
“The critical consideration will remain your cash flow. In case you have steady income and expenses, then the process of saving money through RD becomes easy for you since in this process you save a fixed amount of money every month,” says Anooshka Soham Bathwal, CEO and founder, Dhanvesttor, a women-centric wealth management fund house.
The choice also depends on the goal. Money required soon needs a different arrangement from savings intended for long-term wealth creation.
“The choice should depend on the purpose, time horizon, liquidity requirement and risk appetite. An RD or FD can work well for short- to medium-term goals where capital stability is important,” says Thomas Stephen, director & head - preferred, Anand Rathi Shares and Stock Brokers.
Stephen suggests systematic investment plans (SIPs) in equity mutual funds for long-term goals, provided investors can tolerate market fluctuations.
Start Small And Separate Emergency Money
Calculate monthly take-home pay, then deduct rent, equated monthly installments (EMIs), insurance premiums, household expenses, and unavoidable family commitments. Use the remaining surplus to decide an amount that can be sustained.
“The key factor is consistency in the process, and it is advisable to not start too aggressively, making it tough to sustain oneself. Instead, it would make more sense to begin with lower amounts and keep raising it as income increases,” says Bathwal.
Bathwal suggests that even Rs 3,000–5,000 a month can be a starting point. Stephen puts forward a target of 15–20 per cent of take-home income, where cash flows permit. Neither amount should override essential commitments.
Emergency savings need a separate allocation. Both experts suggest keeping roughly three to six months of essential expenses accessible, with the amount reflecting individual circumstances.
“The objective is to create a two-layer system: easy access for genuine emergencies, but enough separation to discourage unnecessary withdrawals,” says Stephen.
Before choosing an arrangement, check its withdrawal conditions against likely cash needs. Keep emergency money accessible, automate contributions towards other goals, and review the amount when salary rises, or an EMI ends.
FAQs
1. How can salaried individuals automate their savings?
Set up an automatic transfer on payday. Choose an amount you can sustain after paying essential bills, EMIs, insurance premiums, and family commitments.
2. How much should you save each month?
Start with what your budget allows—even Rs 3,000–5,000 a month. A target of 15–20 per cent of take-home pay can be considered if expenses permit.
3. Should emergency savings be kept separately?
Yes. Keep roughly three to six months of essential expenses accessible, and check withdrawal conditions before choosing where to keep this money.
