December 26, 2020
You must have heard several times that you should save money, but many of you do not have an idea of what it does mean to you. Most of you have lame excuses to flinch from building an emergency corpus. While you have bills, debts, necessities and want to pay, you have a hard time putting aside money for a rainy day.
Even if you are not earning a good amount of money, you still have room to get a small chunk out of your income to set it aside. When it comes to saving money, it does not mean that you have to stash away a large portion of your income. It can be as little as 5% depending on how much you earn and how well you manage your spending.
Many people set saving goals, but a few of them achieve them because most people do not understand a realistic way of doing that. It becomes all but impossible if you are living from paycheque to paycheque.
Well, whether you are earning just enough to meet your monthly expenses or more than that, you cannot avoid stashing away for a rainy day. It is paramount to understand how much you should save.
If you follow a strict budgeting rule, you will be consuming half of your income for necessities, 30% for discretionary expenses and 20% for emergency corpus. Now the question is how you will allocate that fund to different saving goals?
Emergencies can pop up at any time. You never know when your car conks out, when your laptop goes off, and when your dishwasher breaks down. You need to have some cash for such emergencies. Besides saving money for your planned expenses like buying a new laptop, you must have some extra cash to fund unforeseen expenses.
A rule of thumb says that you should have at least three months worth of the living cost if you lose your job. Of course, you cannot achieve that goal overnight. Start with setting aside small amount like 300, 400 or £500 depending on your monthly income.
You do not need to worry about your retirement funds if you are in your 20s. You should start saving for your retirement when you are in your 30s. However, you must be able to manage other expenses.
There is no sense to save for retirement when you do not have money to pay for emergencies and short-term plans. If your income allows you to stash away for retirement, it should be about 15 to 20% of your income. However, you can start with 10% of your income does not allow that much.
There are some circumstances when you cannot save as much as you want. For instance, you live from paycheque to paycheque or have various types of online loans in Ireland in your account. Here is what you can do to achieve your goal:
- Create a monthly budget. Check out where and how much your money is going. If you are making unnecessary expenses, stop them and transfer that portion of the money to your savings account. For instance, prepare meals at home instead of dining out.
- Try to deposit the money you are left within every month by your next paycheque comes into the bank account. Keep doing it every month. You will find a lot of money adding up in your savings account.
- Give priority to savings. There is nothing wrong to treat yourself, but you should avoid it if that compromises your saving goal.
- Try to cut down on variable expenses like utility bills. Choose a cheaper energy supplier. Cut back on subscriptions those are costing you for no reasons.
Saving money is undoubtedly hard, but it is not impossible either. Even if you are living from paycheque to paycheque, you can save meagre money. If you keep saving money, you will not need to think about where to get a loan in Ireland with bad credit because you can dip into your savings when an emergency pops up.