In general, the general advice is to save 20 percent of one’s income each month.
Try the 50/30/20 rule devised by Senator Elizabeth Warren, a university teacher of bankruptcy law:
- 50% of the monthly budget for essential expenses such as rent and food
- 30% for discretionary spending and entertainment
- 20% for savings
This recommendation to save every 20 percent of one’s income makes sense. But it is not always so simple to apply in everyday life.
The good news is that those who save 20% of their earnings will, in about 40 years set aside 25 times their annual income.
Basically, after 40 years of saving you can stop working for 25 years. All without giving up your usual lifestyle. Yes, it is a simplification, but it gives enough of an idea.
On the other hand, if setting aside 20 percent of your income doesn’t seem like a feasible goal at the moment, don’t get frustrated.
Saving is first of all a habit.
Source: financer.com
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Learn about other financial best practices
#25 | Be conscious of what you spend
Payment awareness is critical. Very often you buy a lot of things using installments or financing, so you have to be aware of what you are paying month after month.
Good financial advice #24 | Learn to say no
Have you ever found yourself self-imposed a spending limit beyond which not to go, so you can manage to save money at the end of the month? It is certainly not easy to make all the accounts add up.
Perhaps it may help to start using a magic word: no.
Good financial advice #23 | Buy without credit cards
The credit card has the virtue of making people pay for things in a deferred manner, but so it is not possible to have full control over purchases and thus monthly or weekly outgoings. If you want to be in control of your spending at all times, make payments and purchases with your debit card.
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