Knowlopedia
Valued Contributor
- Credits
- $0.37390
To make the most of your savings, you need a plan. And to make a plan, you need only three things: some knowledge about how interest rates work, an eye for what's worth saving for now and what can wait until later, and the discipline to save your money.
We'll start with that third point first. It's tempting to spend all the money in your account at once if it means avoiding stress over spending it tomorrow or next week or next month. But if you don't have discipline, then all that future saved money will go up in smoke — as will all that present-day interest! So before anything else, invest in yourself by committing to a savings schedule and sticking with it no matter what comes up.
If you're disciplined about saving your money, then the first thing to do is to figure out where it goes. What are your savings goals? How big a nest egg will you need? Where did those savings come from? How much are you spending now, and what's your income?
Maybe you just got a raise, but if you're spending more than you're making, then any savings will go right into your overdraft. It's important to keep track of your income so that you can tell whether it will be enough to support the life you want.
The rule of thumb is to have three months' salary saved up in an emergency fund — but that might not cover the cost of what could happen if your car needs a major repair or an illness takes out your partner's or spouse's income. In this case, saving for six or even twelve months is a better idea than just relying on a three-month safety net.
We'll start with that third point first. It's tempting to spend all the money in your account at once if it means avoiding stress over spending it tomorrow or next week or next month. But if you don't have discipline, then all that future saved money will go up in smoke — as will all that present-day interest! So before anything else, invest in yourself by committing to a savings schedule and sticking with it no matter what comes up.
If you're disciplined about saving your money, then the first thing to do is to figure out where it goes. What are your savings goals? How big a nest egg will you need? Where did those savings come from? How much are you spending now, and what's your income?
Maybe you just got a raise, but if you're spending more than you're making, then any savings will go right into your overdraft. It's important to keep track of your income so that you can tell whether it will be enough to support the life you want.
The rule of thumb is to have three months' salary saved up in an emergency fund — but that might not cover the cost of what could happen if your car needs a major repair or an illness takes out your partner's or spouse's income. In this case, saving for six or even twelve months is a better idea than just relying on a three-month safety net.
