Saving, for some it is automatic and for others, it seems almost impossible. Saving money is not only convenient and smart, it is actually necessary. By having enough savings, you can prevent financial problems as much as possible. In addition, sufficient savings give you peace of mind, because you always have something on hand when you need it. In this article you can read how much money you should save per month and how you could do that.
How much should you save?
How much you should save may seem tricky. Of course it depends on, among other things, what you would like to use the money for and how quickly you want it together. Nevertheless, the Nibud (National Institute for Budget Information) has figured out how much you should save at least to be able to absorb unexpected expenses, such as a broken washing machine or refrigerator or an expensive car repair. The Nibud rule of thumb is: save at least 10% of your monthly income.
Save 10% of your monthly income
One will shrug at the idea that he should save 10 percent of his monthly income because that’s no problem at all. While someone else may be panicking now, how on earth should you put 10% of your income aside if you just manage to make ends meet?
Do not panic. First of all, the 10% is a guideline. If you are unable to set this amount aside monthly, that is not a disaster. We will provide you with some tips later in this article that will help you save, although it may be less than that 10%.
1. Calculate the 10% of your income
To determine what exactly Nibud’s advice means to you, it is useful to first find out exactly how much 10% of your income is. You use net amounts for this, because that is what you actually get. You can find out your net income by looking at what you get paid monthly in your bank account or by looking at your paychecks.
Save with your partner
Do you and your partner share all costs together and would you like to start saving together? Then you can add all your income together to arrive at a correct calculation.
Addition and division
Add all income that comes in monthly and then divide this amount by 10. The result of that sum is what you should save monthly. For example, someone who earns 1500 euros net per month should save 150 euros.
2. Determine saving targets
The 10% we covered above is for contingencies. In addition, it could of course be the case that you want to save money for certain goals. How much you should save in that case, of course, depends on what it is you want to save for. Would you like to buy a new car? Do you want to save money for a house of your own? Or would you like to raise enough money to make that one dream trip?
How much and how long do you need?
First of all, you will have to determine how much you need for the purpose. How much will that new car cost you, for example? Then it is important that you know how much time you want to have that amount together. Once you have clarified exactly how much money you need and within how much time you want / need that money together, you can only determine how much you should save.
Keep it realistic
How much you can put aside monthly to achieve your savings goal, of course, depends on your / your income. By including your financial situation in your calculation, you can determine whether the savings target is realistic. A savings target is realistic if, in addition to the money you would like / should save every month, you also have some left over for any unforeseen expenses within that month.
You have to buy a new car, because the current car will no longer pass the MOT. The MOT expires in 10 months. You want to buy a used car of up to 3000 euros. The expectation is that you will receive a maximum of 600 euros for your current car. So you need about 2400 euros. This means that you have to set 240 per month apart to achieve the goal. Whether that is possible depends on your situation
A realistic savings target
Suppose you are single and work full-time. With this you earn about 1800 euros per month. Your fixed costs are 1100 euros per month. In addition, you spend an average of 300 euros on groceries. In total, you therefore have 400 euros. The savings target is realistic in this case.
A savings target that is not realistic
You are a cohabiting couple with two children. Every month you will receive approximately 2200 euros. The fixed costs are approximately 1450 euros. In addition, you spend about 500 euros on groceries. The savings target is not really realistic in this case, because you don’t have any space left.
Take a critical look at your situation
Establishing a realistic savings target is only possible if you look critically at your own situation. See how much you need, within what time you need it and whether that is possible with your income. Is not this the case? Then you will have to determine another savings target. For example, extend the goal for a few more years or choose, for example, to buy a cheaper car or make a cheaper trip, so that you can save the money together within the intended time.
How can you make room to save?
For some people, it will not be a problem to transfer 10% of their income to a savings account. This task seems impossible to others. We have collected a number of tips for everyone who does not have enough money to save or who does but who would like to save even more.