World Savings Day 2024, Date, Origin, Benefits and Impact

Saving money is an essential step towards achieving financial goals, preparing for future expenses, and reducing financial stress. Observed annually in India on October 30, World Savings Day promotes awareness about the importance of saving. Globally, however, it is observed on October 31. The occasion encourages individuals to reflect on their spending and saving habits, contributing to financial well-being and security.

The Origins of World Savings Day

Background and Establishment

World Savings Day was first observed in 1924, during the International Savings Bank Congress. This congress, held from October 24 to October 30, concluded with a decision to establish World Savings Day as an annual event. The main goal was to spread awareness about the benefits of saving, aiming to cultivate a savings culture across various demographics, from students to employees in both public and private sectors.

Evolution of World Savings Day

While initially rooted in schools, colleges, and workplaces, World Savings Day gained momentum post-World War II. From 1955 to 1970, the awareness of financial security became more pronounced as people began to understand the importance of savings in securing a stable future, especially after witnessing the economic aftermath of the wars.

Understanding Savings and Its Importance

What Are Savings?

Savings refer to the money left over after deducting consumer expenses from disposable income. It represents the net surplus funds an individual or household has after all obligations have been fulfilled. While savings accounts are considered very safe, they typically offer low returns compared to investments, which seek to grow wealth by putting funds at risk. Negative savings, on the other hand, indicate household debt or negative net worth.

Why is Saving Money Important?

Savings serve as a foundation for financial security and can help meet emergency expenses, major life events, and even retirement. By saving, individuals not only prepare for unforeseen circumstances but also limit debt, which in turn reduces financial stress.

Benefits of Saving Money

  1. Helps in Emergencies: Emergencies, such as medical expenses, home repairs, and unexpected travel, often require funds that are not part of a regular budget. Having savings can help alleviate the stress of meeting these unforeseen expenses without resorting to credit.
  2. Supports During Job Loss: Savings act as a buffer in case of sudden unemployment. With some funds set aside, individuals can cover their living expenses while searching for a new job, providing a sense of stability during a challenging time.
  3. Funds Major Life Events: Whether planning to buy a home, get married, or start a family, major life events can be costly. Savings offer a more prudent alternative to debt for financing these significant milestones.
  4. Limits Debt: Savings reduce dependency on loans or credit for immediate expenses, which means lower interest payments and overall debt. This ensures that funds saved can be used for planned needs, limiting financial obligations in the future.
  5. Helps in Retirement Planning: By starting a saving habit early, individuals can build a substantial retirement fund. As government pension schemes may not fully cover living expenses, a healthy retirement savings fund can make retirement more comfortable.

Savings Schemes in India: Building Financial Stability

India offers various savings schemes, promoted by both the government and public sector financial institutions, that encourage healthy savings and investment habits. Here are some popular savings schemes:

Public Sector Schemes

  1. Tax-Saving Fixed Deposits: Ideal for low-risk investors, tax-saving fixed deposits offer guaranteed returns and tax deductions under Section 80C up to ₹1.5 lakh. These deposits allow individuals to save while reducing taxable income.
  2. Unit Linked Insurance Plan (ULIP): A combination of insurance and investment, ULIPs allocate part of the investment to life insurance and the remainder to mutual funds, either equity or debt-oriented, based on the investor’s choice.
  3. Equity Linked Savings Scheme (ELSS): ELSS is a tax-saving mutual fund with a 3-year lock-in period, investing primarily in equity. Known for its compounding potential, it is suitable for those seeking high returns over the long term.
  4. National Pension Scheme (NPS): Designed to provide a regular income after retirement, NPS accumulates funds over the investor’s working years and distributes them as a monthly pension post-retirement.
  5. Senior Citizen Savings Scheme (SCSS): SCSS, accessible to those over 60 years old, provides a regular income option with assured returns. It is available at banks and post offices across India.

Government Savings Schemes

  1. Sukanya Samriddhi Yojana: This scheme encourages saving for a girl child under 10 years old. It offers tax benefits and matures either after 21 years or upon the girl’s marriage after she turns 18.
  2. Pradhan Mantri Vaya Vandana Yojana (PMVVY): Designed for senior citizens, PMVVY offers a guaranteed 8% return for 10 years. Administered by LIC, it allows flexible payment intervals—monthly, quarterly, half-yearly, or yearly.
  3. Public Provident Fund (PPF): A popular scheme, PPF offers a safe investment option with a current interest rate of 7.1% per annum. Investments in PPF are tax-deductible under Section 80C, and the interest earned is tax-exempt.
  4. National Savings Certificate (NSC): NSC, available through post offices, is a government-backed, tax-saving investment. It is ideal for those looking for secure investment options with minimal risk.
  5. Post Office Savings Schemes: Post office schemes are simple and secure savings options, including Savings Accounts, Public Provident Fund Accounts, Senior Citizens Savings Scheme Accounts, Sukanya Samriddhi Accounts, Kisan Vikas Patra, and the Mahila Samman Savings Certificate. These accounts are designed to accommodate varying financial needs with attractive, government-guaranteed returns.

The Impact of World Savings Day on Financial Health

World Savings Day serves as a powerful reminder of the importance of saving and financial planning. By highlighting the benefits of saving, this observance encourages all individuals to improve their financial habits, set savings goals, and secure their future. Whether through high-interest savings accounts, tax-saving investments, or government schemes, a consistent savings habit can foster financial resilience and empower individuals to navigate life’s uncertainties confidently.

Sumit Arora

As a team lead and current affairs writer at Adda247, my role involves researching and creating informative and engaging content aimed at helping candidates prepare for national and state-level competitive government exams. I specialize in delivering insightful articles that keep aspirants updated on the latest current affairs trends and developments. My primary focus is on educational excellence, ensuring that our readers are well-prepared and informed to face their exams with confidence. Through meticulously crafted content, I aim to guide and support candidates in their journey toward success.

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