How much money should you save?
We live in seemingly safe times: Average wages are high and the population is (largely) doing well. But such times can quickly come to an end. It was only during the last national elections that many politicians warned of an impending recession in Germany, which could also threaten the domestic economy. As a result, more and more Austrians want to save money and save some of their [...]
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 you accumulate.
Therefore, in the following article, we analyze how much money you should save to achieve a satisfactory result - now and in the future.
Content
- Wie spart man überhaupt?
- What are the goals for saving?
- Retirement at 40: Financial freedom and happiness through frugalism | Living minimalistically and sustainably, investing smartly and becoming independent with shares
- 2. Frugalismus kann jeder - Mit klugem Sparen zur finanziellen Freiheit und mehr Zeit zum Leben | Roman Welzk (Frugalismus kann jeder – Wie du mit wenig Geld ein reiches Leben führst, Band 1)
- 3. Die Kunst, nichts zu wollen: Wahre Geschichten von Minimalisten – über Leichtigkeit, Identität und die Freiheit eines einfachen Lebens (Frugalismus ... wenig Geld ein reiches Leben führst, Band 5)
- Important: The advantages of a fixed savings rate
- Consuming or saving?
- Passives Einkommen: Eine Möglichkeit für mehr Einnahmen
- Conclusion: How much money should you save?
Like do you save at all?
If you search online for the term "savings", you will quickly come across the Wikipedia article with the definition.
It says that when you save, you "forgo the consumption of income" and deposit the money for later use.
According to this description, anyone who puts money aside for future purposes is a saver.
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 with the security of knowing that they still have reserves.
What are the goals in saving money?
Everyone can define their own savings goal for themselves. Basically, the aim is to accumulate money for later use.
A classic savings goal for many people today is, for example, to save money for retirement. Experts believe that the pension systems in many European countries will be so overstretched by ageing and other problems that many people will not have enough money to retire. One thing is clear: anyone who saves money for their pension 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 much earlier than the average person. These people set aside more than 50% of their income to save. On the website Frugalists.com Oliver blogs around the topic of frugalism.
Highly recommended books on frugalism (Top 3 bestsellers):
Retirement at 40: Financial freedom and happiness through frugalism | Living minimalistically and sustainably, investing smartly and becoming independent with shares
Buy at Amazon!14,99 €2. Frugalismus kann jeder - Mit klugem Sparen zur finanziellen Freiheit und mehr Zeit zum Leben | Roman Welzk (Frugalismus kann jeder – Wie du mit wenig Geld ein reiches Leben führst, Band 1)
Buy at Amazon!16,03 €3. Die Kunst, nichts zu wollen: Wahre Geschichten von Minimalisten – über Leichtigkeit, Identität und die Freiheit eines einfachen Lebens (Frugalismus ... wenig Geld ein reiches Leben führst, Band 5)
Buy at Amazon!13,90 €
In addition to saving for the distant future, there is also saving for a specific goal in the near future.
This could be the car you really 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
Regardless of whether you are one of the high or low earners in this country, a fixed savings rate definitely helps you to build up a small fortune in the long term.
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 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€
Those who earn more naturally have it easier. Here, a savings rate of over 50% is not utopian.
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 arouse lust 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, if you think about what you could afford if you saved a little longer, you 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.
Once you have saved up a large four, five or even six-figure sum, you will never want to do without 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 is not so easy to get to the next salary level or to earn more "just like that".
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. Many people invest together in a project (usually in the real estate sector). This can be done with a three-digit amount. Repayments are then made regularly.
One of the more lucrative methods is the Creation of your own website. You choose a topic that you know a lot about and where you can write a lot about. Ads are then placed on the website - and you start earning money.
Particularly exciting for amateur photographers: the Stock photos sale. Any good photographer can register on stock photo platforms and then post their photos. If someone wants the photo, they have to pay - and the photographer earns money from every sale!
Owning real estate can be an excellent source of passive income: Monthly rental income come automatically and can be used directly to save money.
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.
