We’re all concerned with saving for retirement and for emergencies that could arise at any time in our lives. But how much should we be saving, and how does one start?
Firstly, it’s always a good idea to have enough money put away to cover at least 3 – 6 months worth of expenses. So if something happens, and you have a loss of income, you won’t have to get into additional debt and will still be able to cover important bills and utilities.
When you take money out of your savings, try to always put back the same amount, or more if you can. It’s easy to keep withdrawing money when you have it, but sooner or later you’re going to run out. By having a rule to always replace (and add to) what you take, you’ll think more carefully before withdrawing cash.
Organise a debit transfer to a savings account of some kind, to be debited every month on the same day your paycheck clears. That way, you won’t even spend time thinking about it.
In the event of a cash injection – whether it’s money from a relative or even a bonus from work, put that money away immediately! If you hang onto it too long, chances are you’ll want to spend it.
Tip: aim to save about 10% of everything you earn, every month.
Once you’ve resolved to start saving money, it’s important to have a savings plan. This doesn’t need to be complicated, but it should include a basic outline of the methods that you’ll be using to get saving, such as:
- Set goals – decide whether you’re saving for something specific, for money to be used as an emergency fund, or just to accumulate funds.
- Keep track of your finances – by monitoring ATM withdrawals, bank statements and collecting receipts.
- Decide on a savings vehicle – a dedicated savings account, unit trust, retirement annuity or even an endowment policy. Your goals will help you decide which of these works for you.
- Review your progress – after a year of saving, see how close you are to achieving your goals, whether they’ve changed, or whether you’re putting away the right amount.
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