Saving is a habit, just like going to the gym or changing your diet. However, just as it is impossible to run a marathon without prior training, the art of saving also requires preparation. The easiest way to achieve this is by creating a simple but solid action plan.
But how to apply these criteria in practice? According to the experts, it is enough to follow three fundamental steps: define the savings capacity, establish a specific objective and trace the path to achieve it.
Under ideal conditions, savings should represent 20% of payroll. Thus, if a person earns around 1,500 euros a month, he should allocate around 300 euros to savings. However, from HelpMyCash they warn that it is not always possible to reach this percentage. "A person who lives alone, for example, can allocate more than 50% of their salary to rent. If we add to that the fixed expenses, such as the market or the costs of supplies, it is difficult for them to save 20%" , they assure.
Aware of this reality, experts insist on the importance of recognizing one's ability to save. To do this, they advise creating a comprehensive budget, where all monthly expenses are noted and classified as fixed —such as rent or purchase— and variable —such as subscriptions or leisure.
Based on this analysis, it is convenient to identify which expenses can be reduced to allocate that money to savings. "It doesn't matter so much if at first you manage to save 20 or 30 euros a month, saving is a habit and, over time, the amount saved will gradually increase," they explain from HelpMyCash.
If you save without pursuing a defined purpose, it will be more difficult to maintain consistency. For this reason, experts advise determining a specific purpose for saving, such as having an emergency fund in case an unforeseen event occurs, planning a trip, buying a car or raising the money necessary to contract a mortgage.
And they advise, for example, that the emergency fund reach the equivalent of three or six months' salary. If the objective is to buy a car, it is enough to know the sale price —for example, 6,000 euros— and the same applies if the objective is to take a trip.
With the objective in mind and the savings capacity defined, everything is ready to create a savings plan that meets the 'SMART' criteria mentioned above.
For example, if the objective is to buy a car for 6,000 euros and the saving capacity amounts to 200 euros per month, an action plan would be drawn up as follows: save 200 euros for 30 months until reaching the amount necessary to buy the vehicle . This action plan is characterized by being specific, measurable, achievable, relevant and its compliance is defined within a specific period.
"If it is established that the objective will be reached in two and a half years, for example, deposits or remunerated accounts can be used to progressively increase those savings, which will make it possible to shorten the term of the savings plan," they conclude from HelpMyCash.
