First list down all the goals you would want to achieve and the things that you would like to have in the near, not so near and the distant future. For example, you may want to buy a new car, go on a foreign holiday, buy your dream house or even create a wealth reserve to support you after retirement.

The money that you put aside after meeting your expenses is your savings. Savings help in emergencies when you need quick access to cash (called liquidity). For example, you or a family member may need immediate hospitalization due to a sudden illness or accident. Your savings also help you meet your short term goals; for instance, you may want to take a holiday in the near future, which can be funded from your savings. Most of us leave our savings in our bank account. While our money remains safe, it also earns a modest amount of interest.