Saving money is an important part of personal finance. However, the amount of money you should save varies based on your income, expenses, and financial goals. In this article, we will discuss how much of your salary you should save and why it’s essential to prioritize saving.
The 20% Rule Of Saving
First, note that there is no one-size-fits-all answer to how much of your salary you should save. However, financial experts recommend that you save at least 20% of your income. This means if you earn N50,000 per month, you should aim to save N10,000 monthly. This amount may seem daunting, but remember that it includes both short-term and long-term savings.
If you have higher expenses, you would have to save a larger percentage of your income to achieve your financial goals. On the other hand, if your expenses are low, you would have to save a smaller percentage of your income.
It is also important to know that the 20% rule is just a guideline, and you can save more or less than 20% depending on your income, expenses, and financial goals.
For example, if you have a high level of debt or a mortgage, you may need to save more than 20% of your income to achieve your financial goals. On the other hand, if you have low expenses or live frugally, you will be able to save less than 20% of your income. However, saving money can be either short-term or long-term. What do I mean?
Tunde’s life as a primary school teacher was tough, but he had managed to keep his work afloat by working long hours. He earned about 50,000 naira every month, which was just enough to cover his living expenses and reinvest in his business. However, Tunde had a bad habit of spending all his money as soon as he earned it. He never thought it was necessary to set aside some of his profits for emergencies, such as unexpected equipment repairs or medical bills.
One day, Tunde needed to pay for a professional course, but he didn’t have any cash in hand or savings in the bank to cover the cost.He was forced to borrow money from his friends and family, which was embarrassing and put a strain on his relationships.If only Tunde had been saving some of his profits every week for emergencies, he would have had the money he needed to buy the course and improve his skillset. This is why short-term savings are so important. Emergencies happen, and when they do, having a financial safety net can make all the difference. Whether it’s for unexpected medical bills, car repairs, or broken equipment, having some money set aside can help you avoid financial stress and keep your life on track.
Do not be like Tunde, who learned the hard way that short-term savings are just as important as long-term savings. By setting aside a small portion of his salary every month,, he could have avoided the stress and embarrassment of borrowing money and been better prepared for emergencies in the future.
Another essential area of savings is long-term savings, which includes saving for retirement and other long-term financial goals. Financial experts recommend that you save 15% of your income for retirement. This may seem like a lot, but it’s important to start saving early to take advantage of compound interest.
In addition to saving for retirement, you may have other long-term financial goals, such as saving for a down payment on a house or a child’s education. These goals may require additional savings and should be factored into your overall savings plan.
How Do You Get Started?
Are you tired of living paycheck to paycheck? Do you want to achieve your financial goals and live the life you’ve always dreamed of? Then it’s time to start saving, and Earnipay is here to help!
If you’re new to long-term savings, the first step is to set specific financial goals. What do you want to achieve in the future? Do you want to retire comfortably? buy a house? pay for your children’s education? Once you have your goals in mind, you can start developing a savings plan that will help you achieve them.
At Earnipay, we have a savings feature that allows you to save for both short-term and long-term goals. Our savings feature offers maximum protection for your funds, so you can be confident that your hard-earned money is safe and secure.
When you open a savings account with Earnipay, you can set up automatic transfers from your checking account to your savings account. This means you can save money without even thinking about it, and you can be assured that your savings will grow over time.
Our savings feature also offers competitive interest rates, which means your money will earn more over time. This is a great way to maximize your savings and achieve your financial goals faster.
Ready to do better with your money click here to get started with us!