Saving money doesn’t have to be a chore. You may be reading this as you are struggling to keep yourself financially afloat, or maybe you want to kick start your future and need the push to start.
Nonetheless, how much should you really be saving based on your income?
Read on for handy tips and useful tricks to get you into good saving habits.
“Started from the bottom now we’re here”
From humble beginnings in Burma, I migrated to Australia in 1972 and paved a long journey of building a number of businesses from scratch, facing near bankruptcy and raising my daughter as a single parent.
My road has been rocky, but it’s shaped my career as a leading Perth life and business coach. The advice I give people from all walks of lives comes from experience, not from privilege.
Budgeting is your friend: the 50-20-30 rule
The 50-20-30 rule can help you with your budget in its three spending categories:
- 50% of your income should go on living expenses and essentials. This is utilities, rent, groceries and transportation to/from work.
- 20% of your income should go towards financial goals. This is your SAVINGS and debt-reduction payments, such as credit card payments.
- Finally, 30% of your income should be allocated to flexible spending. This is the fun stuff, such as the things you want but not necessarily need such as movies and travel.
For example, say you’re paid $1,000 on a weekly basis – that’s $500 on living expenses, $200 on financial goals, and $300 to do with what you will for a week. With the 50-30-20 rule, that’s $10,400 savings a year!
Saving money is about your frame of mind, discipline and a dedicated savings account.
- Nobody can force you to save – you must truly want to set aside funds (however little, but regularly) for future benefit.
- Discipline yourself – automate your money so a designated amount automatically gets swept away into another account. Keep it consistent, keep it regular. Identify what is a need and a want. Bread and milk for the week? Need. Latest smart-phone when yours is working just fine? Want.
- Create a separate savings account for your savings. It may seem obvious, but make sure you do not touch this one. Name it whatever your goal is, i.e. “Home deposit,” “Rainy day funds” or “Europe 2020.”
- Remember the 50-20-30 rule of thumb.
It may seem daunting to save money when we have so many living expenses and an abundance of choices for flexible spending. You may be wondering how you could ever afford a home deposit, pay off your debt, or have $3,000 set aside for emergency situations. This is where using the 50-20-20 rule of thumb can save you worrying, but most importantly save your $$$.
Ready to turn your rainy-day funds into something real? Perhaps you want more guidance on your life, business and financial needs. Book a complimentary consultation today.