You may never have needed to save and you have been doing well living day to day, but the truth is that unforeseen events happen and when that moment appears the most sensible thing is to have a little "Unforeseen cushion" so they don't become a bigger problem.
Surely you think: "If I charge more I could save, but with my salary it is impossible". Well, we want to tell you that you do not necessarily need to charge more, but to organize yourself better. It is clear that income counts towards saving, but there are times when those who want to do more than they can. Each person with their budget and adjusting it to their needs.
The best way to save is to have a clearly defined purpose for the money saved and a time frame. The amount of monthly savings must be feasible and easy to achieve and must be defined based on a thorough analysis of the sources of income and expenses.
How do i do it?
Let's start with the practical and fun part, how to save? The first thing we want to tell you about is that there are a series of steps you must take before you start saving meaninglessly.Balance your accounts: You must be very clear about how much you earn and how much of that income is used for fixed, eventual and recreational expenses. By fixed expenses we understand those that are necessary to live (electricity, water, rent, food, gasoline), eventual, those that are not month by month such as car maintenance, and recreational, dinners in restaurants, trips, purchases for the home or personal.
- Make a savings budget. Once you have an idea of how much you spend in a month, you can start to organize the expenses you recorded and establish a budget that you can live on and how much you can save. We advise you to try to save from 10% to 15% of your income.
- Find ways to cut expenses. If your expenses are high and you can't save as you'd like, it may be time to cut back. Identify categories that are not essential in which you can spend less for a while, such as entertainment, eating out, subscriptions ...
- Decide what your priorities are. After your expenses and income, your goals are likely to have the biggest impact on how you distribute your savings. Make sure you keep your short-term and long-term goals in mind; It is important that planning for retirement does not take a back seat after short-term needs. For example, if you know you will need to replace your car in the near future, this would be a short-term goal that you can start saving for. If you want to give your children a quality education, this is one reason to start and achieve this long-term goal.
- Choose to automate your savings. Almost all banks offer automated transfers between your checking and savings accounts. You can choose when, how much and where to transfer money, and even split your direct deposit so that a portion of each paycheck goes directly to your savings account.
- Be consistent: It is useless that the first three months you save a huge amount, if then you are going to spend four months without paying anything. The important thing to achieve this is to be constant and do it every month.
Now that you have these techniques, we are going to see two exercises that you can put into practice and they will help you.
- The 52 week challenge: With this sure name it already catches your attention. It consists of saving an amount each week progressively: the first week 1 dollar, the second 2, so on until the week. (The amount chosen week after week will depend on you, the more you spend, the better.)
- The 50/20/30 rule: It consists of dividing your income into three parts:
- 50% for basic expenses.
- 20% for savings.
- 30% for personal expenses.
Choose your savings method and start to see how they grow little by little.
Remember that in addition to these techniques and exercises, you can always choose to take out insurance with savings and get profitability for your money. If you choose this option, at BMI we have plans that adjust to your circumstances and provide great benefits.
Contact us for advice!
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