In the current trying times, everyone is concerned about their financial wellness. In this article, we will address the question of how much money should you save each month and the steps you need to take to achieve your financial well-being.
How to Improve your Financial Wellbeing?
The best way to up your financial well-being is to save more. However, the question is how much money should you save each month and how to. The article answers it.
1. Create a Budget and Allocate a Percentage to your Savings
To become financially well and fit, you must sit down with your spouse, create a budget at the beginning of the month, and plan your expenses accordingly.
You should evaluate the current situation and take into account future plans.
Bring 50/30/20 budgeting rule into practice. This states that
- 50% of the income should be reserved for spending necessities like food, medical bill, education, etc.
- 30% can be used for discretionary spending.
- 20% should go towards savings.
2. Consider an Emergency Fund
Before creating a saving plan, make an emergency corpus fund that will help you stay at peace when a surprise car repair bill pops up, or an emergency medical repair bill spruces up.
The current pandemic has further given impetus to the importance of contingency funds.
To meet unforeseen expenses, you should reserve 3-6 months of your salary as an emergency fund.
3. Create a Savings Plan for the Future
Whatever your age is, creating a retirement fund is necessary.
It would be best to put aside some amount every month from your savings in your retirement corpus and doing it in the early years is beneficial.
But if you were in short of funds then, you should start now.
It doesn’t matter how small you set aside an amount; it can be increased as your income grows or if you get a promotion or a raise.
4. Evaluate how you would spend the money
You can evaluate how would you spend the money by thinking about your
- Long-Term Financial Goals
- Short Term Financial Goals
If you want to save money for long-term financial goals, you can invest in an insurance plan.
Investing in health insurance and disability insurance plans will protect you in case of contingency and help your survivors live stress-free lives.
The short-term goals include buying gifts for the occasion, paying taxes, preparing for the birthday celebration, etc.
You need to put aside $500 per month towards the goal.
5. Cut your Spending
The best way to add savings to your kitty is to stay frugal.
Trim down your large expenses, like instead of purchasing an expensive car, opt for a cheaper car, rather than throwing an expensive wedding, and buy a house.
You can even cut down on your cable TV bills if you stay outside most of the time.
It can help you save $50 to $60, which you can put towards other money savings goals.
6. Investing will pay you
You can save a certain percentage of your salary and invest in stock mutual funds to get healthy returns.
You can also invest in the National Endowment fund or Provident fund.
However, it would be best if you calculate tax before investing in these instruments.
These steps will help you determine how much you should save every month.
7. Create a mindfulness habit to save more
It is a habit that will make you aware of how much you spend, where you spend, and whether it is necessary to spend there.
In this way, you can save more and get the freedom to manage the money masterfully.
Money mindfulness will not strategically improve your financial scenario or wipe out your debts, but it will have far-reaching effects.
It will reduce your stress, boost self-awareness, and improve your focus and decision-making ability.
The question of how much you should save is purely an individual decision. However, it should be enough to accommodate your personal or financial emergencies.
If you think you can’t do it yourself, you can join some financial wellness programs. These programs will make you aware of your current financial wellness score and help you on how you can improve it.
It will jumpstart your financial journey to attain and accumulate wealth. The programs will also help you educate and self-evaluate your financial goals.
Conclusion
In conclusion, we like to say that we all face money problems now and then. Just like eating nutritious makes us stay fit and active, positive money habits help us stay financially stable.
Savings in simple terms encompasses everything and includes all areas of life. It includes deciding how much we have to spend, making and evaluating financial decisions, and paying bills and debts.
Financial wellness habits or saving habits are not taught in school, so not everyone understands the impact of saving money.
The steps mentioned above will help you get out of the stress and deal with economic issues more confidently.
The holistic approach to effectively managing your financial life is to ask yourself how much you can afford to save based on your current income and expenses.
Then create a balance that works for you or enrol yourself in some financial wellness programs to stay financially fit. We hope the question of how much money should you save each month is well-answered.
