Are you among the 65% of people who stay awake at night for money worries? Managing your money can definitely be overwhelming, especially if you do not know how much you should save a month to have a financial balance that gives you peace and tranquility. The good news is that you do not have to do much to control your finances. You just have to follow some simple rules to take care of your expenses and solve your most pressing money problems.
It is not about not spending anything and limiting yourself completely, but about leading a healthy economic life by learning to save money in a short time .
We have prepared a brief questionnaire that will help you achieve financial balance and, above all, the peace of mind you deserve. In addition, we present you with five basic financial rules that will change your life and put you on the path to a more prosperous future.
How much to save per month
Everyone has a unique situation and there are no specific financial numbers that define success, but there are some practical rules that can help you measure your progress. These rules will put you on the right track.
Spend less than you earn
More than 75% of full-time workers live on a daily basis with the monthly salary they receive. That is to say, they do not manage to generate savings or form a patrimony or, even worse, they are indebted and they do not manage to leave the vicious circle of the collection of interests.
Unfortunately, it is impossible to get ahead and achieve a financial balance if you spend more than you generate. In order to save, you must have money at the end of the month and for this, you have to cut unnecessary expenses and not give in to the sudden impulse to buy anything.
You need to reduce your expenses and find a way to increase your income.
One way to increase your income is through some extra activities you can do from home. You can do crafts, cook cakes, knit clothes or do a garage sale.
Institute a 24-hour rule for large purchases
Many people feel guilty after making purchases, especially when they are aware that the expense was unnecessary and that they bought something they do not really need. Spending a lot of money on something that does not bring joy to your life is a waste.
To stop the blame and make sure you get the value of each purchase, establish a waiting period of at least 24 hours before making a large purchase.
Of course, the definition of “large” purchase will vary according to your income. But, in general, any purchase that exceeds $ 1,000 is a big one.
The 24-hour waiting period gives you time to think if it’s really worth a big expense: Do you really need that new cell phone or is there something better you can buy or get with all that money?
A waiting period also gives you time to find a better deal. If you can not get the item out of your head and decide to buy it, you can save some pesos anyway if you are looking for the best offer.
Put yourself in the same channel with your partner
Money is the main cause of stress in relationships. Not only does fighting for money make it difficult to get along with your partner, it also makes it difficult to achieve financial goals.
If you are trying to save or leave a debt and your partner lives in the mall, you will never get out of your troubles.
To make sure they are in the same channel, make time to talk and agree on household finances. Make agreements on the goals you want to achieve.
Think and write down how much you want to save and what your financial goals are for the future. Then, find ways to work together to achieve your plans.
If you constantly fight over expenses, it may be best for each to have a separate account with a mutually agreed amount of money for entertainment and free expenses.
Save for the lean season
Emergencies are going to happen. Unfortunately, almost 60% of people do not have enough money in the bank to cover an emergency. More than half of households facing an economic crisis are slow to recover their financial equilibrium for more than six months.
If you do not have savings for the lean times, you will perpetually end up in debt when you have to solve an emergency with your credit card.
This will derail the payment efforts and make saving more difficult. An ideal goal is to save enough cash to cover between 3 and 6 months of living expenses.
If that seems insurmountable, start saving a little money each month until you have at least $ 20,000. You can grow your emergency fund little by little, but at least you can cover some financial emergencies without resorting to credit cards.
Prioritize your retirement savings
Even if you do not follow any of the other rules that we have suggested, this is the most important, which you must obey with rigor. You must save money for your retirement. Once you can no longer work, there will be nothing you can do, so you must act now.
Before paying anything other than the most essential bills, divert a portion of your salary to invest in a retirement fund or pension program. Ideally, you should save at least 15% of your income.
What is the level of debt I can handle?
In a perfect world, not having debts would be the best answer. But we must bear in mind that sometimes we do not have enough money to face a health emergency or to undertake a home remodeling project or the purchase of a good.
Most experts agree that your total monthly debt payments should not exceed 36% of your gross monthly income. That is, if you earn 10,000 pesos, the maximum you have to pay for debts per month is 3,600 pesos. This is a good stop, if you can reduce this number you will be in very good shape.
One of the most used savings rules is to save at least 10% of your income. Keep in mind that this usually means that you are saving additional money in a retirement or retirement plan as well.
The 10% rule applies to the creation of a savings mattress for unexpected expenses, college education or other goals.
When it comes to how much you should save for retirement, you should review the program agreement you have for when you stop working. In some cases it is pertinent to invest the money you save extra to increase the amount you will receive at the end.
Younger people who have more time to save should strive for a minimum of 10%, although the closer they are to retirement, it is better to increase savings between 20% and 30%, depending on their ability to save.
Create a fund for emergencies
An emergency fund is used to cover expenses when there is a sudden loss of income or other financial emergency. Most experts suggest that a home should have between three and six months of expenses available in case of an emergency.
So, if your monthly obligations amount to $ 9,500, you must 9 try to keep between $ 28,500 and $ 57,000 in your emergency fund.
Do not forget about retirement
Many experts use the assumption that you should opt for approximately 75 to 80% of the income you received before withdrawing.
Remember that you will not allocate a part of your monthly money to the financing of your retirement, so your average monthly income will be almost the same.
Another way to think about it is with the assumption of a lump sum that says that your total retirement savings should be approximately 20 times greater than your annual retirement expenses that are not covered by external income sources, such as social security or a pension .
How much should you invest for a house
You must start by calculating the proportion of debt with respect to your income that you should have, remember that your debts should not exceed 36% of your income per month. Minimize your debts and you will know how much money you can allocate to the purchase of a house.
Another golden rule for housing is that you should buy a house that does not cost more than two and a half or three times your annual income. For example, if between you and your partner earn and your spouse together earn $ 288,000 per year, you should not invest more than $ 576,144- $ 864,000 in an apartment or house.
Start with what you can save. Increase aggressively your savings, including the diversion of your increases to your retirement and / or retirement funds, until you have reached your savings goal.
Living in accordance with these golden rules of money management is not easy. But if you can achieve it, the rewards are worth it.
A happier marriage, more financial security and the ability to stop worrying about money are benefits that will pay big dividends once you control your financial life.
Achieving financial balance is possible, all you have to do is cut unnecessary expenses, contain your consumer impulses, organize your purchase plans, allocate fixed amounts to your savings, generate an emergency fund, save money for your retirement and develop a adequate financial culture.