If you are young (or even if you are not), saving and securing a future may be one of your priorities. The insecurities that arise at certain moments in life and different vicissitudes make us decide to ask ourselves questions about why we should save and how much do I need to save to have the future we want. We are going to solve any doubts that may arise and we are going to give you some advice so that you take note and choose what you think is more accessible.
Why should we save for our future?
Savings is the biggest headache of any person and ensure good financial stability. Any income that we decide not to invest in something is a saving.
To ensure our future it is necessary that we bear in mind that saving is essential. However, we must bear in mind that saving is not everything: we can save up to the limit where your expenses do not allow them to be reduced further. A person needs to spend to be able to survive on a day-to-day basis: food, house, electricity, gas, etc… All this involves expenses and, in a way, we will tend to save. It is on our part that we do it more or less.
However, we have to bear in mind that the amount to save will not always be the same and various factors come into play, such as inflation, opportunity cost or unforeseen events that may arise.
We cannot say what exact amount we should save for our future because it will depend on our income, quality of life, the status we have or want to have and many other circumstances.
Let’s see it better with an example. Imagine that you want to save $100 of your current salary every month, which means that in 30 years you will have $36,000 saved. And yes, it is true, except that the factors that we have indicated above come into play and that will make that saving vary: a washing machine breaks, they leave you unemployed, they reduce (or raise) your salary, you have to buy a car new…
Saving is not everything
Yes, as we have seen, saving is not everything. Of course, saving helps, but for us to have a secure future, saving our income is not enough.
At this point, you will ask yourself: if saving is not enough, what should I do then? Invest. Many times we make investments almost without realizing that they compromise our future or the future of our income. That we buy a house, a car, choose certain financial products or other key elements help our savings to grow more or less in the future.
Products to invest in our future
We want to talk about the latter since we can invest in different products that can give us a good return on money in the future:
- Emergency funds. It is a financial product in which an amount of money is reserved in formal savings (such as a bank account) or in informal savings and that aims to provide peace of mind by having cash at a certain time when it is very necessary for the user.
- Long-term investments with low risk. There are many other products that we can invest in and secure some long-term money while assuming low risk. This is the case of specialized investment funds or time deposits.
- High risk financial products. If, on the contrary, your thing is risk, you can dare with some derivatives, futures (which carry a high risk) or other products such as stocks or investment funds . Each one can fit your pocket, if that’s what you’re looking for.
Probably wanna read:
- Steps to make a personal savings plan
- 4 challenges and savings methods that you should know
- 15 tricks you don’t know to save money at home