Retirement The main goal of saving money is to set aside a small amount every month or year for different financial purposes. This can include creating an emergency fund, saving for a house down payment, or preparing for retirement. Even saving a hundred dollars or so can accumulate over time.
However, there are various expenses in life, and unexpected events can put a strain on finances. Nowadays, you not only have to worry about paying rent or a mortgage and supporting yourself, but also dealing with the financial challenges caused by the COVID-19 pandemic.
All these factors make saving money seem difficult, but it doesn’t have to be.
Despite the pandemic, there are people known as “supersavers.” They are individuals who participate in an annual survey conducted by Principal. This survey provides insights into the lives of these supersavers and highlights the potential for improving our money mindset. Interestingly, many of these savers are not high-income earners, as a significant portion of them do not make six-figure salaries.
1. You Have To Make An Emergency Fund
In the survey, 97 percent of the participants mentioned that they have saved money for emergencies, with different amounts. Out of those, 34 percent have saved enough to cover expenses for three to six months, 22 percent have saved for seven months to a year, and 30 percent have saved more than a year’s worth of expenses.
Experts recommend starting with a goal of saving enough money to cover expenses for three to six months. This is considered a good starting point because having an emergency fund provides a sense of security in case something serious happens. It gives you time to deal with the situation and find a solution without feeling overwhelmed.
2. Do Make Some Splurges… But Keep Them Controlled
Even though people make sacrifices, there are still some individuals who have their own indulgences. According to the survey, only 5 percent of the participants refrain from splurging altogether. For most people, their splurges are infrequent, with a few big purchases here and there.
Around 53 percent of them spend money on subscription-based services like Netflix or Hulu, while 46 percent indulge in traveling. Other forms of splurging include buying coffee on the go, dining out once or twice a week, or purchasing non-essential items. Some people even splurge on luxury cars.
Everyone has their own temptations, and it’s hard to resist them. The important thing to remember is the frequency of indulging. It’s fine to dine out once or twice a week, but it becomes a problem if it’s happening 10 or 11 times a week. Similarly, buying a luxury car is acceptable if you can afford it and have had your current car for several years. However, it’s not wise to replace your car every single year.