To spend or to save – that is the question. Balancing between ‘living your life’ and ‘saving for the future’ can be tough but having control over your money doesn’t mean leaving no room to enjoy.
Here are our top tips to help you strike a balance so you’ll save well, live well and retire well.
Determine what you’re saving for. This will give you something to commit to. These goals may be short-term, like going on vacation or long-term, like buying a house. When setting goals, factor in needs like emergency funds. If you don’t have an emergency fund, build one. Prioritise this over other goals because an unexpected setback can knock you out financially if you’re not prepared. Reserve 3-6 months of expenses and put aside a fixed amount at the start of every month.
The 50/20/30 rule
The easiest thumb rule to follow when starting out. It’s an effective way to keep your finances on track. You get to spend at least 50% on your needs, 30% on wants. You don’t have to cut all corners. Save 20% to spend ‘tomorrow’, which goes towards saving for the future you.
Automate the process instead of manually moving funds from checking account into savings account each month. Count for savings in your monthly budget, set it, and forget it.
Adjusting to your financial goals
Financial experts recommend saving at least 20% of income; and with 20% of your income missing, sacrifices and adjustments will need to be made. Saving is a habit that needs to be developed. This means, the earlier you start, the earlier your money will grow.
If you missed out on saving during your twenties, start doing it now. Stop making excuses and start small – even if it’s just saving a dollar a day.
Photo Source: Jill Wellington from Pexels
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