Saving money is something that everyone tries to do. People save funds for a variety of purposes, but the universal one is retirement. Everyone understands that it is not enough to rely on your government for support when it comes to retiring, which is why having enough savings in your account is very important. All experts say that you need to start saving as soon as possible, but how much money do you need to have exactly at every age? In this article, you will find information about the recommended amount of savings at each stage of your life, as well as a few ways of saving money.
The Amount Of Savings Needed
Deciding on how much money you need to save for your retirement is a tricky question. Each country has different average prices and income, different retirement laws, etc. Inflation is another thing to be aware of as having a few thousand euros now is not the same as having this money in a couple of decades. To have an approximate understanding of how much money you need for living comfortably after retiring, you need to start with your salary and the average cost of living for you. Here is what experts recommend when it comes to saving fund for retirement based on your age:
- Thirty years – by the age of thirty, it is advised to save up at least one time your annual salary.
- Forty years – three times your annual income.
- Fifty years – six times your annual income.
- Sixty years – eight times your annual income.
These are the approximate numbers that you should use as a guideline for retirement savings. However, there are other saving goals that you might have too. Another common category of savings is your emergency fund. This amount can differ greatly, but it is also highly important to leave this money untouched unless there is a real emergency.
Working With Your Savings
Saving money is not only about putting aside a certain amount of cash each month. There are ways to manage your savings and even boost them. If you want to make money work effectively, here are a few ways you can do it:
- Pay off debts – one of the best things you can do to start saving efficiently is to get rid of all the debts first. Being in debt slows down your saving ability tremendously. If you save up money to deal with the debt in the first place, you will have much less trouble reaching any other goal afterward.
- Set up a retirement account – having a retirement savings account is incredibly convenient. This is usually the most long-term goal you can have, and having it separately on a dedicated account is beneficial. You will not be able to spend this money or withdraw it easily, which helps save up. In addition, you will be able to earn interest.
- Investing – if you want to earn some additional funds that can be used on your short-term and long-term goals, investing is a great option. Everybody can invest money online using modern services. Alternative investment platforms like Quanloop are often used for investing money starting with one euro and up to thousands of euros. If you want to earn passive income and save your funds from inflation but do not know where to invest money online, alternative investment solutions are always useful.
- Automate your savings – when saving up for many different things, it can become confusing and difficult to keep track of all transactions. In case there are saving categories that you allocate a specific sum of money to regularly, you can automate your payments and save some time and effort too.
- Start small – for many people, the idea of saving money is quite intimidating, and the first sums you put aside might seem too small. However, it is great to start small, as you will be able to see how your budget behaves and adjust savings as you go.
Prioritizing your savings is an essential step. Look at all the things you want to save up for and arrange them from the most to least important or urgent. By allocating more money to the most important savings objectives, you will be able to complete them earlier while still saving up for the rest of the goals. Keep in mind that it is necessary to revisit your savings goals regularly because our priorities tend to change. By looking at your savings every month, you will be able to manage them more effectively.