Who doesn’t like to see a fat account balance in their savings account? It gives you a sense of security and an assurance that you can tackle any crisis. This past one year has been tough on all of us in more ways than one. The unpredictability and having no control over the pandemic has made many of us paranoid. So to reassure yourself and to gain some control over life, you like to see that, at least, financially you have a good balance in your savings account.

Any cash left after meeting all your monthly expenses should be directed towards your financial goals. If you just hoard money in your savings account, you are doing an injustice to the cash in the bank, yourself and your future goals. These are signs that you are holding too much cash in your account.

No plan for your savings –

Situation –

If you are unsure how to handle the cash, without a plan, you will just keep the money idle and may spend it on unnecessary things.

How to handle it –

If you want to grow your wealth and have a meaningful retired life, then start planning your goals and divert your excess cash into funding those goals.

Unsure of how much is needed for your Emergency Funds –

Situation –

 It is imperative that you have an emergency fund. But, having too much cash pumped into your emergency fund isn’t good either because emergency fund is usually done in investments that can be easily liquidated and may not be garnering high interest rates.

How to handle it –

Ideally if you have about 3 to 6 months’ of your expenses saved, that should cover your emergency fund. Utilise the excess funds to grow your portfolio and make it stronger with diversified investments.

Excess money over your expenses –

Situation – Constantly month on month you have cash remaining after paying your bills and other expenses. This is a good sign; this means you have funds to start planning for your future goals. If left in the bank account, it isn’t going to give you the same returns as in mutual funds.

How to handle it –

Calculate your monthly expenses for a few months which will you an approximate spending habit. Taking the high end of the expense, set aside funds to meet that and move the remaining funds to investments that will give you better returns.

Waiting for the right time –

Situation –

In this volatile market and uncertainties surrounding us, there is no right time. If you worry over the instability of the market and the risks involved and you fail to make any investments, you are losing time and end up with cash in the bank which isn’t earning you anything.

How to handle it-

It is never too late and you should take the plunge into the market now. There is no right time for investments because the market is dynamic and keeps changing. However you are cautious you cannot predict the market and make safe investments. To mitigate the risk, you can invest funds in intervals, so you are spreading the risk over time and diversify your investments so that your funds are spread across different risk appetite funds.

By hoarding money, you are not helping yourself. You may have the money in your account but it isn’t creating wealth for you. By doing your research, taking advice and studying the market, you can make informed investment plans to meet your future goals. This way you can have a happy present and a relaxed financially secured future.