How much money can we save each month
Saving is not an easy task for many families. Logically, disposable income influences our ability to save. For each month the more we earn, the easier it will be for us to save money from the payroll. However, saving is not just a matter of the rich. Sometimes excess cost overruns or poor financial organizations prevent us from meeting our savings goals. The 50/20/30 rule can help us change this dynamic and increase our savings account.
50% Of Payroll For Fixed Expenses
There are a series of expenses that are unforgivable: rent or mortgage, electricity, water and the rest of the supplies, the weekly purchase of food and hygiene products, the payment of current debts, etc. These expenses usually represent a high percentage of our monthly income, and to meet them, we must anticipate them sufficiently in advance. The 50/20/30 method reserves half of the revenue to these expenses.
In this category, we would include those expenses that are essential. It is easy to fall into the temptation of putting in this bag games that are more a whim than a necessity, such as the Netflix quota or the menu of the day that, in reality, we could replace with a lunch box full of homemade food. Fixing expenses that we pay it regularly does not imply that it is essential.
30% For Leisure
We all like to treat ourselves once in a while. Leisure time is an essential part of our day-to-day, but if we do not have enough control, it can become a drain through which much of our income can go. The 50/20/30 method recommends allocating 30% of the income amount to personal expenses. We are talking about dinners in restaurants, getaways, drinks, gifts, etc.
20% For Savings
We should save the remaining money each month, to accumulate funds to be prepared for any unforeseen event or to be able to face significant expenses in the future.
One of the keys to achieve this objective: Every month save money as soon as you receive the payroll. Don’t do it at the end of the month. Since in that case, the amount left in our account may be less than what we should have saved. One trick is to schedule an automatic transfer at the beginning of the month to a savings account.
So how much should I save?
The 50/20/30 method establishes a savings volume based on each person’s income. Thus, a person who receives $1000 each month should spend $200 on savings. One that entered $1,500, $300 per month. And another that earned $2,000, $400 per month.
That is not a fixed rule. The higher our payroll, the easier it will be to save 20% of it, and even, we will be able to increase that percentage. Likewise, if our salary is not very large, but our fixed expenses are low, it will not cost us to achieve that goal either. Conversely, a person with a modest income and other dependents may have difficulty saving that part of their payroll.
Keep Your Expenses At Bay
Writing down all the monthly expenses and categorizing them. It will help us to know how much we spend each month and in which items we can cut. We can use a notepad, the typical Excel sheet, or one of the many mobile applications that allow us to record daily expenses. The advantage of the latter is that they will enable us to carry out an exhaustive control of expenditures. Don’t forget to write down any since we usually always carry the mobile on us. Also, we can attach tickets to each entry and create monthly reports by category.
