When and why should you start saving?

Savings is the part of income that is kept after meeting our necessary expenditures (utility bills, domestic expenses, etc). When we come across situations like setting up a new business, investing in some expensive items or any financial emergency (medical cost, unexpected job loss) – one can easily deal with such situations provided he has enough savings.

Suppose you start saving at age 25 and your friend starts at age 35 with Rs 5000 @12%, till the age of 60 years, so let’s u see how much each one of you would save.

Saving early will help to enjoy the power of compounding, which means an increase in the value of investment because of reinvestment of the interest earned to grow the principal amount.