There is no doubt that saving money is hard. But at the same time, it is necessary to help you live a better life. With this in mind, here are some fundamentals for making a savings allowance and the benefits you get when you have savings.
The Fundamentals
Make It A Requirement
You need to make savings a core requirement of your life. Just like you need food and shelter, you need to make sure that you were putting aside a portion of your income every month. The best way to do this is to consider it a bill that you have to pay.
Try using what is known in the world of personal finance as the 50/30/20 rule, where 50% of your monthly income should go towards your necessities (such as bills, rent etc. ) 30% towards wants (such as eating out, clothing etc.) and 20% towards your savings.
Follow this rule rigidly and treat your savings like a bill that you would have to pay every month. Make it on par with your rent, or electricity bill’s, and like those bills, will make sure that they get paid monthly.
Make It Easy for Yourself
Today you can work with your bank, and they will help you to find and set up the best savings account that suits your needs. You can also visit a financial advisor who can work with you work out a realistic budget.
Almost, if not all, banks have mobile apps that you can use to manage your accounts too, which is a great example of finding tools that make saving money easier. Take advantage of these tools, and you will consistently save money every month.
The Benefits
Money to Invest
We’ve all heard stories about people who invested in companies like Apple, Amazon when the stock was cheap, and now those people are multi-millionaires from their investments. The reason they were able to make these investments is that they had money saved. Having a savings account allows you always to be ready to make a good investment when it presents itself. If you intend to invest, you need to become very knowledgeable about the investment category that you were considering and any risks that are involved.
Once you’re clear about these things, you may find that there are great opportunities like Apple or Amazon that are available. Or they may be investments that aren’t is dynamic, but that can generate for you consistent revenue over a long period of time. And you’re participating in these Investments is all possible because of your savings.
An Emergency Fund
We never know what is going to happen and life has a way of throwing emergencies at us when we least expect them and when we are least prepared to deal with them financially. By having an emergency fund, we can deal with emergencies on our own terms. As an example, if your electrical lines were damaged by a storm or rodent infestation, you may experience complete power outages and potential appliance damage as a result. If you have an emergency fund, you do not need to think twice about the cost of hiring an electrician (like this electrician oakleigh) to restore power and repair any damages you may have suffered. The only thing then you need to focus on would be to get the problem fixed as soon as possible.
In a similar vein, unforeseen events, such as fires or natural disasters, can greatly impact your daily life. Perhaps there was a fire or natural disaster that no one saw coming. These things could vastly change the quality of your life. If you had to wait for government assistance in order to get your life back together it could take years.
Having your own money and that situation can jump-start things. Perhaps you unexpectedly lose your job. The stress from this might require that you take some time off, and that requires money. Maybe you have a relative who is going through some tough times, and you want to be there financially for that person. All of these situations are normal life occurrences. Having savings to deal with any of them makes things easier.