How much should you save from each paycheck
When it comes to saving money, not everyone can successfully do it. There’s reasons why this is but if you don’t have savings then that means you don’t have an emergency fund.
An emergency fund is crucial for anyone to have when they have commitments and responsibilities in life. Having an emergency fund can help you when you’re in financial disarray, whether that’s through losing a job or sudden unexpected expenses that are owed.
The solution to this?
Saving money from your paycheck.
It can be done and it’s something that most people can do to some degree. Hopefully, this post will help you save yourself some money. Here’s how much you should save from each paycheck.
Save At Least 20% Of Your Monthly Income
This should be an attitude that you have towards your money when it comes to your monthly income.
It can be done by budgeting your money properly as and when it comes in. We all have expenses that come out of our monthly income but if you are putting aside at least 20% of that income straight away and into your savings, it can go to areas of your life where you’ll benefit from it in the future.
Create an Emergency Fund
Having emergency expenses is one way of making sure that you are covered in times where you need a sum of cash quickly. Perhaps your boiler has broken down or maybe you’re out of a job and need some money to sustain you while looking for a new job. There might be times where you need money as an income if you are sick and that sickness surpasses the normal sick pay you’d get from your employer. Again, the same goes for it if you’re laid off from your job.
You are much better off by saving money every month than taking a loan to cover your emergency expenses.
Save Up for Retirement
Retirement is an important part of your life, even though it’s one you don’t really want to think about anytime soon. However it’s good to put plans in place and more importantly, start putting money aside. When working for a company, you’ll be putting this money aside automatically but you could also set up a private pension to top up your funds.
It’s something that’s particularly important to do when it comes to those who are self-employed and haven’t got the luxury of having an employer matching your pension.
You can also use these savings to pay for goods to treat you and your family as well as vacations that you might want to take every so often. When it comes to your monthly income, you want as much of it to go towards rewarding you for your efforts!
What To Do With Your Savings?
When it comes to your savings, there’s so much you can do with them, especially when you have funds to spare. One way to do this could be by investing and diversifying your money across savings accounts, stocks, bonds, p2p lending, crypto currency and real estate.
Savings Accounts – One of the low risk options when it comes to investing because there’s not much chance that you’ll lose money and instead there’s a little interest that gets added on by the bank every so often. As far as investments go though, you don’t get much more for your money by keeping it in a savings account.
Stocks – Stocks are great and are one of the more traditional formats. However, it’s important you have good knowledge of them before investing, as it can be a volatile market.
Bonds – Bonds are good as they come in a variety of forms. Again, these are more long-term investments and so they don’t necessarily provide a quick financial profit like other investments would.
P2P Lending – Peer to peer lending is a popular form of investment because it’s new and pretty much anyone can do it. Sites like p2pempire.com will help you compare various P2P lending platforms. You can read a review about Mintos to get you started investing on one of the most popular platform.
CryptoCurrency – A bit of a hit and miss investment because although it’s gaining popularity, to some industries, it’s still a risky form of currency. Research wisely and before proceeding.
Real Estate – Another traditional form of investment and not as volatile as the stock market. Can be a great investment opportunity for both short-term and long-term.
Being in the mindset of saving is very important and by saving your money, you provide yourself with better financial security. Use these tips to help save you money and to spend it on things that will hopefully make you more money in the future.