Saving is much easier said than done. Who really likes to keep a budget? Saving money on a regular basis is difficult for everyone. We do, however, have some tips and guidelines that can help you save more without feeling restricted in your budget. The following information will help you organize your budget in order to meet constant savings and help you achieve your financial goals.
How much should I save?
First, you must decide how much of your income you will save each month. Experts recommend saving 10% of your income, so the amount you save is proportional to your earnings. Since each person has a different income, this amount is different for everyone. Those who earn more also have a higher cost of living and would, therefore, need a higher emergency fund. To find out how much you should save, multiply your income by 0.10. If you can not afford to set aside 10% of your income, start with a smaller percentage and go up.
When should I start saving?
Make sure you save enough money each month. It is important to think carefully about monthly savings and make them an obligation to yourself. See these savings like any other type of bill, which must be paid. By applying this discipline, you will eventually achieve enough savings. However, do not wait until the end of the month to save money. You will not be able at this moment. The best way is to set a date and set up the automatic transfer to your savings account. So, you will have this money from month to month.
How to save?
You need to organize your savings strategically to achieve your financial goals. Although it’s easier to set aside a small amount of your income in a single account every month, it’s better to have multiple savings accounts. Separate your money into three separate accounts: medium-term and long-term and make sure that the money you save will be there when you need it.
When kept in a traditional savings account and easy to access as needed, short-term savings are money set aside for the near future. This is your main savings account that you will use for your personal consumption, such as furniture or hockey tickets. It can also be used for emergencies or spontaneous expenses. This savings account is your account for less planned expenses. The balance of this account should never be zero and always have a minimum amount of about $ 1000. This will give you peace of mind, knowing that you always have access to this surplus in an emergency. When used after an unexpected expense, it is important to fill out the account for a future unforeseen expense.
The savings you save for the next few years will help you maintain financial stability and achieve your goals. This money is used to buy major goods that require years of savings, such as a car or a down payment for a home. You can also use this money to pay future expenses; this account could serve as a buffer if you ever find yourself unemployed or sick for a certain period of time. Like a savings account, it is recommended to save 3 to 6 months of household expenses. This should be enough to maintain your household and continue to make your payments and other expenses for half a year. Even without income, you will always have enough money to live comfortably without having to use credit and accumulate debt. In addition, medium-term savings are usually in money market accounts or in short-term investments that can be cashed.
This savings account includes money that most people put aside for a lifetime. This is all the money saved for important events and long-term financial goals, such as university funds for your children and a retirement fund. These long-term savings also include money withdrawn from investments, such as stocks or real estate. With these surpluses of money, you will increase your assets thanks to high-interest rates. In addition, this money held in special accounts will only be used for your long-term goals. So, you could open different accounts with different rates, and the money will be used only later. For example, if you save for retirement, you will use an RRSP account, and if you save for tuition, you will choose another high-interest account.
Determining how much you want to save, when to start saving and how to divide your money are the first three steps that everyone should take on the path to a healthy financial future.