When the time comes to talk about finances, one of the classic questions that always seems to come up is, how can I save money? Is there an easy way to do it? Can you find money just by turning over stones?
Although it’s true that money doesn’t grow on trees, it may be possible to take much better advantage of the money you earn than you realize. To do this you will just need some ingenuity and a little help, and in the end, you will be able to save more easily and get closer to achieving the goals that you were only able to dream about before.
Saving in and of itself
There are many different ways to save money, from dropping your coins into a piggy bank to making deposits into a checking account, or opening a savings plan, or investing in the stock market. Clearly, every solution has its pros and cons: while your piggy bank will not pay you any interest, your investments in the stock market may also come with some serious risk of losses. This means that the method used for saving is something that each individual must select, based upon his or her own lifestyle. The next question is, where are these savings going to come from?
There are several different philosophies when it comes to saving. Whereas previously the tendency was to save whatever was left over at the end of the month, these days the opposite process is more likely to be applied. In other words, a portion of your income will be deposited into a separate account as soon as it is received. There are various ways of acting in relation to your savings, which we can refer to as “techniques for saving”.
The most commonly applied techniques for saving
In order to save systematically, you must automatically set aside a portion of your money before it can be used to pay for other expenses. These days there are two models that have gained a solid reputation:
- The 50/30/20 model works by dividing your income into three different groups, then dedicating each of these to a different purpose. You should use 50% of your income (no more, no less) to pay for your basic day-to-day needs, such as your rent or mortgage payments, expenses for food, etc. Another 30% of your income must be dedicated to things that you enjoy but that is not strictly necessary: recreation, cultural activities, travel, etc. And finally, 20% should go into savings, ideally separated out from your income right away. It is also a good idea to put this savings into a separate account.
- The 52 model is another option that has become quite popular lately. Its name is based on the 52 weeks in a year, and the model consists of saving an increasing amount of money each week. In the simplest version, an effort is made to save the same amount of money as the number of the current week: during the first week of the year you only have to save €1, while in the 20th week you must save €20 and in the final week you must save €52. This method will allow you to save €1,378 in a single year, while hardly noticing the impact.
These two options represent two alternatives, although you can always try to go further, for example, by squeezing the maximum savings you can out of your income.
To summarize: there are a variety of techniques for monitoring and controlling your expenses, which as a result can allow you to save a little more. And fortunately, these days you no longer need to carry your notebook around with you or go asking for help; it has never been more accurate to say that the solution is in your own hands.