Every person has aspirations in life; in most cases, these dreams require monetary support. An education abroad, a new vehicle, and a vacation require money, if you have instant finance then well and good, however, many will not and this is when savings come to the rescue. Knowing ‘how much should I save each month, ‘where can I get the most returns’ or ‘when is the right time to save’ can all help develop a better future for yourself. The world functions on money and since you are a cog in the system, you need to be efficient with your money as well. Therefore below are some useful tips to help you to know ‘How much should I save each month’ and everything around it.
The Importance Of Saving Money:
Before we jump into how much money should you save each month’ let us understand how saving money can be worthwhile.
Future-ready: Everybody yearns for a better tomorrow and for that, you need good money management today. The world is growing at a rapid pace and everyone with it, being able to sustain a good lifestyle couple of years from now is important. Saving money will help you in securing your future and even your future generations. Also, there is no set-in-stone age to start saving, parents can even set up a savings account for their newborn for the child to then reap the rewards later in life.
Emergencies: There are some things in life that you just cannot predict, such as natural calamities, medical crises, accidents etc. Having a savings amount, especially an emergency reserve can greatly aid in these unfortunate situations. Your every penny saved can help you or your close one get out of a tough situation which otherwise can take massive tolls physically, mentally and emotionally.
Independent: Having a saving amount with established financial freedom is definitely the biggest way to be independent. Buying a brand-new car and not having to rely on relatives or banks for loans or money lending services is no less than an achievement. Saving money will also instil a healthy disciplined lifestyle and the mindset of living efficiently which is a form of mental freedom.
Stress-free: Stress is the biggest killer of happiness, worrying about how much should I save each month for purchases or whether will I have enough to survive the next month can be stressful. Having a saving and investing mindset can not only solve such problems but also provide a stress-free living. Living comfortably does require peace of mind and not having to be bogged down with financial burdens.
The 50-30-20 Rule
Saving money for each person can vary immensely, some may find it easy to do while others may not. Regardless of background, the 50-30-20 rule holds good for everyone and answers the question of ‘how much should I save each month’. To put it simply the 50-30-20 rule divides the monthly income into portions. 50% is used on necessary expenditures, 30% of it on personal expenditures, and 20% of it goes into investments or savings. For example, if your salary is 50000, then 25000 of it would go to things like bills, debt, insurance, groceries, etc, 15000 would go to amenities like shopping, dining, movies, etc and the final 10000 would go to savings.
Modes Of Investing:
How much should I save each month can be handled by the 50-30-20 rule but you should also know where to invest saved money. In the end, to get rich you have to let money make money.
- Stocks: Investing in companies
- Banks: Fixed deposits, recurring deposit
- Gold: Physical or gold bonds
- Real Estate: Land, Buildings, etc
- Govt schemes: Pradhan Mantri Jan Dhan Yojana (PMJDY), Atal Pension Yojana (APY), etc
Q1. How will saving money benefit me?
To establish a financially secure future for not only yourself but people close to you and not have to worry about ‘how much should I save each month’ 10 years from now, saving money today is very effective.
Q2. How much savings should I have if I want to live comfortably?
Living comfortably is very subjective, some might require the most minimal lifestyle while others the most lavish. At least having 20% of the monthly income as savings should answer the question of ‘how much should I save’ for comfortable living.
Q3. What is a good age to start saving money for the future?
More than age the habit of saving should be inculcated at an early age which would make it easier for you to know how much should you have in savings as you grow.
Q4. What is a good amount of money that can be saved every month?
People ponder over the question ‘how much should I save each month’ but it would entirely depend on your goals. With that being said, 20% of your monthly income would be an ideal saving amount for a secure future.
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