Gaining our financial independence is a prerequisite for all of us since we were little, proving to ourselves that we have stepped into adulthood, and even for some of us to be able to make our own decisions independently.
Yes, saving money can often be difficult. The state of the economy, our obligatory needs and some extra expenses that will make our lives more colorful can force us to save money . Especially if you have just started making money, managing money can sometimes become a nightmare. So, how do we get rid of this nightmare and how can we establish financial balance?
Some Rules We Recommend You Follow When Saving Money
1) Your savings need not necessarily be an amount. You should calculate your savings as a percentage.
2) It is important that you set a saving percentage because it adjusts itself as your income increases or decreases without affecting your livelihood.
3) It would be beneficial not to increase your spending ratio while your income is increasing. Instead, you can determine your savings rate based on the amount you have left when you subtract your essential needs from your income.
4) It would be logical to make your savings not in money, but in precious metals. Since these precious metals are not affected by inflation, you will not lose your savings due to changing rates.
How Much Should You Save at Which Stages of Your Life?
Early Years of Your Career
At this stage, you’re probably in your 20s and it may seem unlikely that saving will be a priority as your expenses are generally high during this time. However, at this stage, it would be a logical choice if you aim to save 25% of your total annual income. This means that you will try to cover all your expenses (including debt payments) with 75% and not exceed this rate. If you plan your budget properly, it is quite possible that you can save enough for the future.
Family Formation Phase
At this stage, you’ll likely be in your 30s, 40s or 50s. In addition to the need for short- and medium-term savings to meet emergencies and your children’s education expenses, long-term savings can become more difficult with many increased responsibilities. At this stage, it is recommended that you save an amount equal to twice your annual income every five years. For example, if your annual income is $50,000, you should aim to save up to $100,000 in 5 years.
Have your savings account linked to your main account so you can transfer the amount you decide at the beginning of each month. This will ensure disciplined management, making it difficult to delay saving.
At this stage, you should decide how you can realistically evaluate this savings, taking into account your lifetime savings.
Here are some tips to help you reach your main savings goals across all savings stages:
Spend as much as you earn and make sure you stay on a good credit score.
Your credit score is your financial history, and if things get worse at some point, you may need to take out a loan. At this stage, you may want to make sure you pay off your debts and maintain a clean financial statement.
Create an emergency fund.
When unexpected emergencies occur, such as when you lose your job, you can rely on your emergency funds to avoid having to use up your long-term savings or retirement savings.
At the end of the day, saving from the early years of your career towards retirement is a long game. No matter what stage you are at, not meeting your savings goals will not make you a failure. The important thing is to get back on track as soon as possible.
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