Proper Way of Saving According to Financial Experts

Proper and Effective Saving Tips

     Saving is one way to manage finances to prepare reserve funds in the future.

Savings also play a role in ensuring your financial stability if you need sudden funds later on.

Indirectly, saving helps you find out your priorities in finances.

Starting a saving activity plays an important role in the financial flow, especially for those of you who have just worked, and have an income.

The truth is, saving is not always an easy habit for everyone. This will become more difficult especially if you don't begin to get used to the right way of saving.

The Proper Way of Saving According to Financial Experts

Here's how to save the right way according to financial experts, as reported by GoBankingRates.com

Set Automatic Debit to Saving Account

Saving by automatic transfer is the most effective way. It is recommended that at least 10% of your salary be transferred by auto debit to a savings account. That way, you will never forget to save. This can prevent you from being tempted to spend your earnings, before putting them in savings.

Set the transfer amount and transfer date consistently, which is directly transferred to the savings account. By applying this method, you learn to be disciplined in saving in an easy way.

Saving Starts from Small Amount

You can start saving from small amounts first, but do it regularly. Not many people can save large amounts, therefore, start small.

If you are not familiar with the allocation of savings that are 20% of salary, you can start with 2% of salary.

However, make sure that the percentage increases every month until it reaches at least 20% of the salary. Even first jobbers should be able to live off half their salary, because they don't have many dependents and expenses.

Creating a Separate Account

It's important to separate your savings account from your daily account. By separating a savings account, you have saved money to use in an emergency at a later date.

Collecting Your Change

Collecting change can be used to shop for items with great value.

For example, change money after shopping at the supermarket, if collected, can be used to buy coffee and lunch. You can also save on lifestyle spending, and save the allocation of savings money.

This loose change will indirectly help you reduce the use of credit cards to pay for a lifestyle.

Signs that You Haven't Saved Properly

Some of you may have started the habit of saving, but is the method used the right way? The following signs indicate that you haven't been saving properly.

Savings Account Not Separated from Daily Account

If your savings account is still integrated with your daily necessities account, it can be said that your savings method is not right.

Combining savings and spending money will make the account balance bigger. This actually pushes you to spend even more. Instead of saving to increase money, the amount of savings will be reduced due to spending outside the budget.

Unstable Saving Account

When you have a separate savings account, make sure that there is no other activity in the account, only saving.

Having a large nominal savings amount can encourage you to spend it.

In case of an emergency, you can still use the savings. With a note that the value is not greater than the amount you save each month. If you're not in an emergency, but you still often use your savings to spend on tertiary needs or luxury goods, there's definitely something wrong with your way of saving.

Percentage of Savings

Before receiving your salary, you should make a budget to determine the portion of savings, spending, and other social activities. You should set aside about 10% -15% for the allocation of savings. Ideally, the percentage of savings is not less than this.

As salary increases, the percentage of savings should increase as well. If the nominal money you save is still very small, while your income has increased, it means that something is wrong with your spending budget.

Are you still experiencing any of the above signs? If yes, then now is the time to start the right saving habit. It's never too late to begin improving your financial management.