Are your savings enough?
Everyone of us knows that we have to have to be saving into an emergency fund and thereby set aside money for those rainy days, retirement, children’s schooling, and so on. The big question that remains is, how much is saving enough?
The numbers differ depending on which adviser you talk to. Some will say 20% of your budget should be set aside regularly until you reach your objective. It is part of the 50/20/30 rule that was has recently gained popularity. It presumes that whatever your income is, half of it should cover your necessary monthly expenditures. Thirty percent should be money for so called wants. This includes leisure time activities and fun stuff. And the twenty we already mentioned.
Defining your financial objectives is vital. If you don’t know where you are going, how will you know when you get there? More often you will just stay put and not get anywhere. This is why you need to precisely quantify your financial objectives. These can be:
- rainy day fund
- children’s schooling
- reward purchases
We will deal with the number for each of these separately, but generally speaking, the quantification must take place for each of them.
Personal saving objectives
Besides knowing all the numbers, you should also know the reason why, in other words, you must define personal objectives. What are you trying to achieve by saving? Are you looking to help yourself out, help your children or grandchildren? Without knowing this why, you will have a hard time maintaining the discipline to put a certain amount away regularly.
Knowing your options and their benefits
There are of course several ways of saving money. Whichever way you pick, you will always end up with some cash at the end as long as you maintain the aforementioned discipline. However, it is important to look at a few factors. For example, putting some cash away into a savings account is good for immediate back up cash, but there is very little interest if any on this money. Stock market is another good option, but it’s definitely a long term method with zero guarantees. Life insurance products offer a healthy combination between interest and guarantee. A policy illustration will provide you with a good, guaranteed road map to your goals.
Let’s get together and see how we can form a mutually beneficial partnerships that will lead you to your goals.