How much money should be saved per month? It's a simple question I often get from my readers and followers. In fact, there is no limit to how much money you will actually save.
However, there are strong reasons to save a significant amount of money from your income.
To answer this important question, see some statistics from different reliable sources.
Savings Statistics in the United States
By May 2020, at the end of the Covid-19 epidemic, an Average savings of an American family is 33 percent of the total income. Some of it comes from families and individuals for $1,200 a year.
According to a report by Reuters, the US government has made $3 trillion in benefits. This savings epidemic is due to a severe reduction in time expenditure.
However, this is not always the case, as published in a report by Bankrate.com. The report released Bankrate.com in December 2018 shows that an average American household has a median savings of $8,863.
The savings rate for people over 55 years of age is the highest and the lowest in the millennium generation.
A chart published by US News, based on average savings of people of different ages, families, and individuals, does not indicate a pink image. Instead, it clearly shows that most Americans are behind in their savings.
The 2018 Bankrate Financial Security Index has some more tragic details.
23 percent of Americans and families have no savings that can help them survive without income. And only 29 percent of the population has savings that can last six months or a little longer if their income is stopped.
Another 22 percent of Americans and families can live less than three months on their savings, and 18 percent of people can live three to five months if they lose their source of income.
Another bank rate report says that if they face an emergency and cost, about 40 percent of Americans will have to borrow money.
And only 52 percent of Americans have received more emergency savings than their credit card debt, a bank rate report found.
These are the most disappointing statistics by any standard or yardstick, considering that the United States is the largest economy in the world.
In contrast, the median savings rate for individuals and families in India will rise to 30.1 percent in 2019, although the previous year has declined. And India is ranked as the fifth-largest economy in the world.
What does that mean for you?
As a consumer in the US, you must wonder what the above statistics mean for you. And what do they mean?
Without hesitation, I can say that such low savings rates can bring you a disaster in your life, put you in a financial crisis and cause a severe shortage of money for retirement.
Of course, anyone who wants to avoid these problems. After all, who wants to live in Penuri, especially in old age?
So, the above statistics send you a very clear, loud, and powerful message: Increase your savings and investments. This brings us to the first question, how much money do you save every month?
In this article, I will try to answer these important questions.
How much should I save monthly?
In fact, you should try to save 20 percent to 30 percent of your income every month. And it's a recommendation that will be recommended by most economic advisers across the United States.
It is understood that for most Americans, 20 percent to 30 percent of the pipe dreams are impossible.
But the good news is, you don't have to get into this figure right now. Instead, you can try to save 20 percent to 30 percent of your income within a given period of time and through rigorous financial discipline practices.
There are strong reasons why you should be targeted for this magic figure for storage. These are the reasons.
1. Money Time Price
Time Value of Money or TVM is an idea that most people miss. In simple terms, TVM means that the dollar in hand at the moment is worth more than the same amount a year later.
Because inflation, lowering the bank's interest rate and other factors reduce your value of money over a given period of time.
For example, deposit $100 in a container and another $100 in a bank account. After a year, you'll see that you've collected some interest on the bank, let's say 4.5 percent.
This means that the bank will have to pay $104.50 instead of $100. At the same time, the money you put in the jar is only $100.
If your TVM is reduced by only 3 percent, the $100 in the bank will buy you a product worth only $97.
But with $104.50 from the bank, you'll only spend $103 for the same product and still save $1.50. That means you're standing for profit.
The same axiom holds the truth for storage. The money you save and invest will be more than THE TVM depreciation.
2. Insufficient funds for retirement
There's another push. According to a 2019 report released by Yahoo Finance, nearly 64 percent of Americans do not have enough money to retire.
There are several reasons for this unfortunate incident that hurt older people. And that means you may have to work well beyond the average retirement age of 65 years to live.
Retirement plans and health insurance are not enough for a golden year when there is no regular source of income like your salary.
And Social Security is not always enough to cover any additional costs or emergencies that can hit the elderly. A large part of the population cannot afford to buy a retirement home.
The possibility of working life is really unpleasant and scary. Because it is often difficult to find profitable jobs after retirement because the job market is highly competitive. It is translated only as saving money for a comfortable retirement.
3. Absence of emergency funds
I'm referring to the fact that most Americans need to borrow money in an emergency where they need more than $10.
The Covid-19 epidemic of 2020 and its economic disaster have forced millions of Americans to apply for unemployment benefits. Countless businesses shut down shops forever and filed for bankruptcy.
There is no guarantee that such a disaster will no longer be a global disaster. Indeed, the consequences of the Covid-19 epidemic may be felt well after 2021. Therefore, the absence of an emergency fund can put you in serious danger.
Anyone who has borrowed money before will surely know that it can be very embarrassing. Also, there is no guarantee that a relative, friend, or colleague will be obliged to lend the full or part of the required amount.
Savings from 20 percent to 30 percent of your monthly income can help to create a healthy emergency fund. This means you don't have to borrow money or spend extra on a credit card.
How to start saving money
So how does one start saving 20 percent to 30 percent of income without disrupting your existing lifestyle? Actually, there are some simple ways to save money.
1. Save Your Habits
If you start saving, there is no need to remove a large portion of your income immediately. Instead, start by keeping your income from 5 percent to 10 percent.
And if you save a few bucks every month, increase the money a little. For months, you will see that it will be easier to keep more money away before you reach the 20 percent to 30 percent income figure per month.
2. Use the magic formula
Maybe you've heard of this magic formula of how to save more money. It says: "Income minus savings is the same as the cost. So, the first thing you need to do when you get a paycheck is to cut the amount you want to save.
This leaves you with money to spend. Try to increase your savings slowly before you spend. It works very well because you know how to budget and save money, you have to pay for personal and family expenses every month.
3. Get rid of credit card debt
47 percent of adults in the United States or more than 12.0 million people have credit card debt CreditCards.com, a study has found, and CNBC reports.
The study also found that most consumers have added an average of 23 percent of their credit card debt during the Covid-19 epidemic in 2020.
Credit card loans come with a higher annual percentage rate (APR) that can go up to 20 percent or even 38 percent.
This happens when you fail to resolve the entire amount when the bill arrives in your mailbox or for some reason the loan payment is delayed. Instead, step up credit card payments to bring the loan to a minimum or even zero. It's one of the best ways to save money.
4. Find a side-gig
Finding a side-gig or part-time job may be the best thing you can do for yourself. This not only allows you to use the time profitably, but you can also earn some extra money to increase your savings and investments.
A side-gig can be anything from online data entry or transcripts to blogging and blogging. You will get excellent part-time and work-from-home jobs online, depending on your academic qualifications and skills. This kind of work allows you to work with flexible hours. And payments are based on an hourly basis.
5. Start with small investments
And finally, the best way to save money is to make small investments. Maybe you don't know that you can start investing with just $5. There are a few amazing apps available for free for your smartphone.
You just have to register and start investing $5 and anything from above. Some of these apps offer free stock to some companies, depending on your membership level and investment value.
Through these apps, you can invest in stocks, exchange-traded funds and mutual funds, products, currencies, and cryptocurrencies. In a time, this small investment adds a large amount.
More ways to save money
There are some simple ways to save money. One of these is to reduce unwanted and strange costs. The other is buying from online survey websites with discount vouchers and free shopping coupons. You can also get free samples and freebies online to save money.
Using all your loyalty points from credit cards, debit cards, stores, and airline frequent flyer programs is a way to deduct a few dollars from your expenses. And above all, delete all the junk subscriptions you might have
Another great way to save money is to buy a three-foot store. Or you can trade clothes used in the convention store anywhere in the United States.
If you're just looking for ways to save money, you'll find countless and rather practical ways. At the same time, no Rich-Quick scandal has been reported on the Internet.
wrap
The above data and statistics clearly indicate the important savings per month. And some way to save money. Using this information and money-saving tips, you can start your big savings journey in 2021.
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