Savings challenge: save 25% of your salary and double your annual earnings

Often people encounter difficulties when starting a savings plan due to a lack of clarity on how to start, for this reason, many finance specialists staff have developed strategies that adapt to each person’s income, establishing specific amounts to be allocated to savings fund. These strategies allow them to obtain significant profits to allocate to better investments and thus avoid stress for the future.

Looking for new backup methods that adapt to the needs of new generationsthe analyst Kimmie Greene devised a mathematical formula that unifies a savings method based on each person’s age and gross annual salary, in order to adapt the figures individually and make the design of the personal finance.

The easiest way to save is the Greene method

Like most experts in personal finance, Green stresses the importance of starting to save as soon as possible; Ideally, it is suggested to develop habit of spending less of what is gained between the ages of 20 and 25, when most people begin their professional career.

During these years, the main objective is to spend a maximum of 75% of the gross annual salary and save the remaining 25%. Although these figures may include family contributions or previous savings, the most important thing at this stage is to get used to systematically saving a quarter of your income.

The first partial objective of this method is accumulate savings the equivalent of one year’s salary from the age of 30. From this moment, it is recommended to maintain a constant savings ratetaking into account any salary variations that may occur. Green suggests that for every five years of work, a person should save the equivalent of one year of gross salarythe registration form would therefore look like this:

• At age 35, the worker is expected to have saved twice their annual salary.
• At age 40, savings should be about three times the annual salary.
• At age 45, savings should represent at least four times the annual salary.
• At age 50, the goal is to have saved the equivalent of five times the gross annual salary.

It is important to keep this pace until age 65, the approximate retirement age, with savings equivalent to eight gross annual salaries in Bank accountbut for that it is essential to follow these savings instructions to guarantee a good financial situation long-term and it should be noted that the figures provided are indicative and can be adapted according to individual circumstances and personal goals.

Basic tips for learning to save

Remember that Save money It’s a habit that takes discipline and perseverance, with small changes in your lifestyle and you can achieve your goals. long-term financial goalsbut remember that we are human and at any time we can make a mistake, so your recording method You need to be flexible and not punish yourself if this happens. Here are some additional tips that might help:

• Prepare a budget: Keep a detailed record of your income and monthly expenses. This will help you identify areas where you can cut back and save more money.
• Set savings goals: define clear goals short and long term savings. This will motivate you to save and allow you to focus on your finances.

• Reduce unnecessary expenses: Analyze your monthly expenses and look for areas where you can cut costs. For example, you can cancel subscriptions you’re not using, cut down on dining out, or cut down on the use of services like cable or phone.
• Plan purchases: Before making a purchase, compare prices, look for discounts or promotions and determine if you really need the item. Also, avoid impulse buying and wait a few days before deciding if you really want to buy something.
• Save energy: adopt habits that help you reduce energy consumption in your home, such as turning off lights and appliances when not in use, using energy-efficient light bulbs, and adjusting the thermostat to save on heating or refrigeration.
• Avoid unnecessary debts: Try to avoid debt or use credit responsibly. If you have debt, prioritize your pay and seeks strategies to reduce interest, such as consolidating the debts or renegotiate payment terms.
• Save on food: plan your food, make a shopping list and avoid wasting food. Buy bulk products and cooking at home are also good options to save on the food budget.

• To create a emergency fund: Allocate part of your savings to an emergency fund. This will provide you with financial security in the face of unforeseen events and prevent you from incurring debts in case of unexpected situations.
• Save automatically: Set up a automatic transfer transfer part of your income to a savings account. In this way the money it will be saved before you have a chance to spend it.

He The Greene Savings Method It can be supplemented with these savings tips to create an action plan and ensure the financial well-being of coming likewise, you can seek expert advice in order to take the savings method to a more formal level.

Author: Ana Paula Vazquez
Source: El Heraldo De Mexico