How much money should you save?
We live in seemingly secure times: The average wage is high and the population is (mostly) doing well. But such times can quickly be over. As recently as the last National Council election, many politicians warned of an impending recession in Germany that could also threaten the domestic economy. More and more Austrians therefore want to save and put some of their money aside.
Many ask themselves the question: how much money should be saved?
Regardless of whether you are saving for a future investment or for retirement, the monthly savings rate determines how much money is accumulated.
Therefore, in the following article, we analyze how much money you should save to achieve a satisfactory result - now and in the future.
Content
- How to save in the first place?
- What are the goals for saving?
- 1. frugalism: out of slavery: the ingenious financial strategy for your instant pension
- The frugalism formula: How to build wealth without sacrifice | Live a minimalist, frugal and sustainable life, invest smart and achieve financial freedom through stocks and ETFs
- 3. frugalism for the lazy: stress-free financial freedom
- Important: The advantages of a fixed savings rate
- Consuming or saving?
- Passive income: A way for more income
- Conclusion: How much money should you save?
Like do you save at all?
If you search online for the term "saving" you will quickly come across the Wikipedia article with the definition.
Meaningfully, it says that when you save, you "forgo the consumption of income" and deposit the money for later use.
So anyone who puts money aside for future use is a saver by this description.
If you save a lot of money, you can increase your own standard of living in the future, for example. Many people also save in order to be able to live life with the security of still having reserves.
What are the goals in saving money?
Everyone can define their own savings goal for themselves. Basically, it is about accumulating money for later use.
A classic savings goal for many people these days is, for example, to accumulate money for retirement. Experts believe that the pension systems in many European countries will be so overstretched by aging and other problem areas that pensions will not be sufficient for many people. One thing is clear here: anyone who saves money for retirement will have an easier time later on.
The extreme form of a super saver is the frugalist.
Frugalists want to set aside enough money each month to retire significantly earlier than the average population. These people put aside more than 50% of their income to save. On the website Frugalists.com Oliver blogs around the topic of frugalism.
Recommended books about frugalism (top 3 bestsellers):
1. frugalism: out of slavery: the ingenious financial strategy for your instant pension
Buy at Amazon!18,33 ?The frugalism formula: How to build wealth without sacrifice | Live a minimalist, frugal and sustainable life, invest smart and achieve financial freedom through stocks and ETFs
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Apart from saving for the distant future, there is also saving for a specific goal in the near future.
That could be the car you so desperately want, for example - or the new 4K TV.
If you know the target date and the price, you can easily calculate how much you want to save per month.
Important: The advantages of a fixed savings rate
Whether you are one of the high or low earners in this country, a fixed savings rate will definitely help you build a small fortune in the long run.
The savings rate is defined as a percentage and on the basis of it you can set up an automatic debit to the account to send money to the savings account automatically at the beginning of each month.
The fact is: the more money you have at your disposal, the easier it is to accumulate a lot of money. That is logical.
But even low-income earners can save enough money - if they increase their savings rate.
Let's look at this based on a net income of 1,200?
- Savings rate of 10% = 120?
- 20% = 240?
- 30% = 360?
- 40% = 480?
Of course, it's easier for those who earn more. Here, a savings rate of over 50% is no utopia.
Here is an example with a net income of 2,500?
- Savings rate of 10% = 250?
- 20% = 500?
- 30% = 750?
- 40% = 1.000?
- 50% = 1.250?
If you believe various surveys, the average savings rate of the population is somewhere around 10%. If you can't manage more, you can be happy with 10%. But if you want to save more money quickly, you should try to start the race with a savings rate of 30% or more.
Consume or Save?
The temptations in our modern world are great: everywhere you look, the supposedly best and greatest products are waiting - new iPhones, cars, clothes and other things that awaken desire in people.
If you are not in a good mood or simply need a kick, it can happen that you fall into lust and buy one or more unnecessary things.
However, anyone who considers what they could afford if they saved a little longer will quickly realize that quick impulse purchases are anything but sensible.
Stupid people spend most of their money on consumption and save with the rest. Intelligent people put most of their money into their savings account and consume with the rest.
Anyone who has saved up a large four-, five- or even six-figure sum will never want to miss this feeling of freedom and security again. Because even if something should go wrong in life, you still have an ace up your sleeve - your savings.
Passive income: An opportunity for more revenue
As mentioned a few paragraphs above, people with a higher monthly income find it much easier to save a lot of money.
In most jobs, it's not that easy to move up to the next pay grade or earn more "just because."
This is where a particularly interesting source of revenue comes into play: The passive earning money.
Passive sources of income are sources of money that are not fixed to a temporal work. This means that you earn money even when you are not actively working.
Especially the Internet offers many opportunities to earn money passively. Subscribe to the newsletter and we will send you our list of 46 income sources on the Internet + free eBook:
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Interesting passive sources of income
One source of income that is becoming increasingly popular is the Crowd-Investing. In the process, many people invest together in a project (usually in the real estate sector). This can be done with a three-digit amount. The repayments take place regularly thereafter.
Among the more lucrative methods is also the Creation of your own website. You choose a topic that you know very well and where you can write a lot about it. Advertisements are then placed on the website - and you start earning money.
Especially exciting for amateur photographers: The Stock photos sale. On stock photo platforms, any good photographer can register and then post his photos. If who wants to have the photo, he must pay - and the photographer earns money on each sale!
Owning real estate can be an excellent passive source of income: Monthly rental income come automatically and can be used directly to save.
Conclusion: How much money should you save?
How much money you should save depends entirely on your own living conditions and expectations for the future.
If you are saving for a goal (e.g. a new car), you can use our savings calculator to find out how much money should be put aside each month.
In this day and age, it also pays to save money for security, as pensions in a few decades are anything but secure. The higher the monthly savings rate, the more money will accumulate in a shorter time.
Successful savers manage to resist the temptations of consumer society and put aside a large part of their income. This benefits them in later years of life.
