People may want to save money for different purposes. Some plan to open their own business in the future, some want to make a big purchase like a new car or a house, and others just want to ensure that their family will have a safety net for a rainy day. There are many methods for accumulating funds, and here are the most effective ones:
Method 1. Save as soon as you receive your salary
Include a particular amount you want to save in the list of monthly payments. Think like this: this month, you’ll have to pay for utilities, repay the loan taken via the Payday Loans App, buy groceries, and pay for kindergarten. After calculating these expenditures, define how much you can set aside.
For example, your goal is to save $20,000 in 5 months. With an easy calculation, it turns out that the best option is to immediately transfer $4,000 to a savings account on a payday or put money in a box.
Method 2. Save More Tomorrow
If you follow this method, you should gradually increase the amount of savings depending on an increase in income. For example, if you receive $15,000 a month, you must save 5%, which is $750. If you receive a bonus, the amount of savings must be increased to 6%. Then, let’s say your salary is increased by 20% every year. With each increase, the amount that needs to be put aside increases accordingly, for example, from 7% to 10%. Next year, you will receive $18,000, and your monthly savings will be $1,800.
The Save More Tomorrow method helps overcome a common fear: people often think they might not have enough money to set aside or will have to give up something to save more. A gradual increase in the rate of savings, simultaneously with an increase in income, allows you to stay afloat without limiting yourself.
Method 3. The Financial diet
This is an effective technique when saving doesn’t work. The method requires you to remove all expenses and leave the amount needed for survival: food, utilities, medicines, and necessities.
Calculate how much you need per day for food and transport. Multiply the resulting amount by the number of days in the month. Add mandatory expenses. Leave this amount and save the rest. This approach helps form correct financial habits.
Method 4. Investment
When saving money, consider if you are involved in a long-term project or just need a safety cushion. The thing is that the funds will depreciate over the years due to inflation. You’ll get more profit if you invest them in free assets to receive a stable passive income.
Here are the most popular investment options:
Deposit. It is a common but not the most profitable method since interest on bank deposits does not always cover inflation.
Government bonds. It’s the most reliable way to invest since the state guarantees your money’s safety.
Securities. It is a risky and, at the same time, profitable option. Companies pay regular dividends to shareholders, but due to external and internal factors, securities may fall in price.