We are going through a couple of great saving tips today. It depends on what you are going to save for, but to avoid spending money on unnecessary things can be hard when the temptation sets in. But if you learn how to save enough, but not too much, your saving plan will become easier to maintain.
Create a monthly saving plan
Start with a small saving plan and put aside 15% of your salary and make a budget on what remains. Don’t start saving too aggressively because it’s easy to lose control of your monthly budget become too tight.
After running your savings plan for six months and start to feel comfortable, it may be a good idea to increase your savings to 20% if possible. If you do not want to save so much, then it is perfectly ok to settle for 15%, but the more you can save, the faster you can reach your financial goals.
Many banks and financial institutions recommend that you save at least 10% of your salary and ensure that you have at least two monthly salaries as a buffer. But I think it is better to save at least 15% because then you achieve economic stability faster and the opportunity to save even more increases.
Set sub-goals and final goals for your savings
Saved money means you can buy whatever you want without having to take expensive credits or loans. It also provides security, which often leads to increased quality of life. If you create sub-goals, then it may be easier to continue with your savings plan. A part goal may be that you will have two monthly salaries at the bank within one year.
Always save wisely and do not take too big risks with your money in the beginning. Save the long term and learn how to invest your money by comparing different forms of savings that give positive returns but have low risk.
If you have two months’ salary at the bank, then it is time to start saving for real. Never invest any of your initial capital because it is your emergency fund. Create an end goal, and although the end goal can change over time, it is always good to save for something. Even if you do not reach 100% of your target, you have done more than most people by just creating a savings plan.
Savings accounts with best interest rates
The bank interest rate is quite low at the moment, but if you want total security, there are not many other options. There are, of course, high-risk interest rates, but you can compare it to gambling. To not lose money because of inflation, a risk-free savings account is maybe the best option.
Vio Bank has the highest interest rate right now at 2.07%. Still, if you open an international savings account at Atlantic International bank, then you have the possibility of getting an interest rate up to 4% per year. HSBC also has global savings accounts, but then you need a little more capital.
It is quite strange that the interest rate has been so low for so long. It is useful if you have to borrow money but worse if you have to save money. There are high yield savings accounts with higher interest rates, but if you have not been able to build up an emergency fund, then you should focus on getting enough money for your fund before moving with other saving plans.
How much to save per month in index funds.
An index fund can also be called a passive fund, and you don’t have to be active at all to still get a good return on the money historically. You can start with one fund only, but when you build up capital over time, it is a good idea to spread the risks on several different index funds that follow different market indexes.
It is nothing wrong to put the entire savings budget in a fund portfolio, as the risks are relatively low, and you can still expect a return of 5 – 8% per year if you choose to save long term. Index funds are a much better option right now than a regular savings account.
If you get an annual interest rate of 7%, it will take about ten years to double the money. You have to reinvest the profits to be able to generate compound interest. With compound interest, your investment will grow faster the longer the time goes by.
I don’t have enough money to save 10% per month
I know that many people struggle with their monthly budget, and it can be challenging to put money aside. But if you save just 1%, it’s much better than no saving at all. Almost everyone buys unnecessary things, but if you can find out what’s draining your account, then you have a chance to make a change.
No law determines how much you should save per month; it depends on how much you earn or how big or small your monthly expenses are. I believe that investing money is something you must commit yourself too because there are so many distractions and temptations that could waste your money fast.
The best way to start is to begin saving a small amount and increase it over time. You must get used to it, and not putting away too much money when you first start, because that can become a too big economic change. You have to get used to a new financial way of life, and that takes time.
Other ways to save money
You can start paying off loans, which will help you get a better economic situation later on. Plan your weekly grocery budget or find a credit card with cashback or bonus points. Everything that can make your monthly expenses smaller will increase your chances of saving more money.
To get a decent interest rate on savings accounts is pretty hard these days. If you want to get a better return on your money, you should learn more about stocks, funds, and bonds. To get a passive income, you need to work hard beforehand.