In today’s fast-paced world, it is essential to be able to save some money for your future. With the rising inflation, it becomes quite difficult to save money from your income; however, all you need is better management of money. This article will help you in understanding how to save money and invest in the future.
How much should I save up before I start investing?
The answer to this lies within yourself. As you need to first evaluate your income, your finances, and your goals in life, and then decide how much of your savings should you invest? Typically, once you have reached an amount that exceeds your emergency fund; i.e. the money which you will use in case of emergencies, then you can start investing into different options. It is quite easier now to invest as there are many options available online; buying and selling of stocks, mutual funds, etc can all be done on the internet by opening an account and you do not really need to visit anywhere for this purpose.
However, one must keep in mind that while the online world has made everything really convenient for us, it is also necessary to keep your online presence secure from breaches, hackers, and unauthorized access. The VeePN for Chrome can be installed in your browser. It comes as a chrome extension which ensures your data is secure and comes through encrypted channels. The VPN extension can easily be downloaded for free. VeePN not only offers a free trial, but is also very user-friendly, and has great reviews on the internet.
Once you are planning to secure your investments, don’t forget to download VPN to make sure all your browsing regarding your savings is safe and secure.
How do I start saving and investing money?
Saving money is a difficult task, but once you start doing it, you realize its immense importance in keeping your future financial life managed. At times, all you need is that first step towards a saving plan which can then lead you to a proper investment plan in the future. Here are a few tips to help you start saving:
- Keep a record of your expenses: To be able to save your money, it is necessary to first keep a record of your spending. You can simply use paper or pencil for this, or record it in any application, or a spreadsheet. Make sure you are not skipping any important expenses; you can go through your bank statements and utility bills to make sure of that.
- Try to limit your spending: With a list in hand of expenses that you have incurred each month, you can now realize the amount of spending that you could have easily avoided. Try eating at home more than eating outside, try to avoid impulse buying, and only spend on things that are absolutely necessary. If your spending budget is more inclined towards entertainment, then you can explore easier options that don’t cost you a lot and are on a free budget by the government like parks, etc.
- Introduce Saving: Now that you have made a list of all your expenses, it is time for you to realize the concept of saving in all this. Your list of spending must contain a majority of necessary items, but some luxury items as well which you can avoid if needed. Make sure your expenses are aligned with the level of your income, and that you are not overspending at any point. Try to come up with a percentage of your income that you can keep aside for saving. This percentage can be lesser at the start but you can increase it in the future once you have developed a habit of saving.
- Make saving goals: It is essential to set a goal if you are planning to save money, both short-term and long-term goals. In short term, you can think about the money you would require in case there is an emergency situation or if you want to make some important payment like a down payment for a new car, etc. The long-term goals must comprise your plans after retirement, children’s education, purchasing a home, etc.
- Prioritize your goals: Once you have developed a set of goals, it is important to put them in priority of what comes first, for instance, if you are planning to get a new car soon then you must start saving for down payment funds, while if you are near your retirement, then it is necessary to save for the after-retirement expenses.
- Picking the plans: Once you have allotted your savings, it is necessary to explore various investment options. You do not really have to choose one option, but you can choose a mixture of a few to minimize risk. Also, for long-term goals choose a long-term investment option that will help you in getting your retirement fund once you reach that age.
- Automatic savings: This is offered by almost all banks whereby a percentage of your amount will be automatically transferred to your savings account.
How a beginner should start investing?
All of us have varying sets of income and expenses. While, some may have higher income but really high number of responsibilities like tuition fees, etc, others may have lower income and less to no responsibility. Each one of us can design a plan on our own by keeping our income, expenses, and liabilities in mind. Here are 5 easy ways to start with an investment plan:
- Firstly, identify the amount of income that you can are willing to put aside for saving and how much risk you are willing to take on it.
- Whether you plan on making the investments yourself or asking some expert to manage your portfolio for you.
- The investment account which you want to open should align with your current situation for instance an education investment account or an IRA account.
- Once you have opened an account, chose the number of investments that match your risk levels. This can be in form of mutual funds, shares, real estate investments, etc.
- These investments can be both short-term and long-term, if you are planning to invest for education funds or for your retirement, then you can opt for many available plans. If you plan to buy your own house in the future, then an investment in real estate will be appropriate, especially if the returns are high in this sector in your area. A safe investment can also be mutual funds or earning stock dividends each year if you are looking for almost a fixed amount of return and are not willing to take huge risks. Cryptocurrencies are also rising these days, and after careful research, you can plan on investing in these to gain profits. Thus, the main choice of your investment is dependent on the amount you have and the risks you are willing to take, and how much return you are expecting in the future.
What’s the 50 30 20 budget rule?
There are many saving methods that you can use to ensure that you are saving an adequate amount of money not just for the purpose of using up later but also for investment.
One such ideal saving tip is the 50/30/20 budgeting rule. It is an easy budgeting method that will not only help you in managing your money effectively but will also ensure that a part of your money always goes into saving. This is particularly beneficial for those who do not how much to save and always end up with the guilt of little to no saving at the end of each month. So, the rule as the name suggests is basically about dividing your money into three categories; 50%, 30%, and 20%.
50% of the total amount of your income goes into fulfilling your basic needs, while the rest of the 30% goes into fulfilling your needs. The rest of the 20% is your savings. This will help in keeping your budget balanced, as you will only have a specified amount available to fulfill your wants, and if you are thinking of overspending, you can always delay that expenditure for the next month. It will also ensure that 20% of your income will go into your savings, no matter what.
Thus, a total saving balance will be maintained, which you can then use to either keep for the future or invest as there are many tips and options regarding it mentioned in the article previously.
In a nutshell
There are plenty of ways to start saving once you have actually learned the art of saving. There are many investing tips mentioned in this article, which will help you in making yourself save as well as an investment plan. You can use many online opportunities to do that, and once you get a hang of it, trust me you will love yourself for the amount of returns you will be receiving in the future.
