Would you love to be financially independent? Personally, it means having enough money to do whatever you need to be done without having to worry about the state of your finances because your finance is still great.
Yes, I know saving can be quite difficult. But I’ve found that being too strict with savings can boomerang, you have to give little leeway to enjoy yourself and still save. You don’t have to cut off every enjoyable thing in your life to be able to save. So, my advice? Don’t be too strict on yourself about it, you can have fun while saving enough for the future.
This is achievable, yes, you can do it! Let’s see what you can do to make saving easier:
Important Rules to Follow When You Save Money
- You do not necessarily have to have a specific sum. Instead, you should have a specific percentage.
- A specific percentage is important because the percentage would adjust as your income and profit increase or decrease, without affecting your livelihood.
- You do not have to increase your spending rate to match your income. Instead, you should rather increase your saving percentage if you find that you have a lot more money left after your taxes, expenses and bills have been met.
- Collecting precious items can be an interesting idea to save money. You can collect gold, silver, diamond or anything that keeps appreciating irrespective of inflation.
How Much You Should Save at Different Stages of Your Life
The Stage of Starting your Career
At this stage, you are most probably in your 20s and saving is very unlikely to be a priority as there are numerous expenses. However, it is reasonable that you should aim to save 25% of your overall income yearly. This means that you would try to cover up all your expense (including debt repayment) with 75% and make sure you DO NOT exceed that. If you properly plan your budget, you should be able to save enough for the future.
The Stage of Bringing up a Family
At this stage, you are in your 30s, 40s, and 50s and long term saving is even more difficult with lots of responsibilities, in addition to short and medium term savings for emergencies and children’s college fees. However, it is advisable that you should have twice the equivalent of your annual income saved up every five years. For example if your annual income is $50,000, you should aim at saving up to $100,000 in 5 years.
Have your savings account linked to your main account so you can transfer your agreed funds into it at the start of each month. This would make it easier to save and remove procrastination.
The Stage of Thinking of Future Retirement
At this stage you should take stock of your savings and work out what you might realistically expect from your lifelong savings plans.
Through all the saving stages, some tips to help you achieve your main saving goals include:
Staying on top of your debts and getting a good credit score.
Your credit score is your financial history and if things get dire you might need to get a loan and you want to be sure that you have been paying off your debts and keeping a clean financial slate.
Having an emergency fund
When emergencies happen or you lose job, to avoid dipping into your long term or retirement savings, you can fall back on your emergency funds.
At the end of the day, saving towards retirement is a long game of saving and saving and saving money. If you are unable to meet your saving goals, it does not make you a failure. The important thing is to get back on track as soon as you can.