It is the desire of a lot of people to save money. Everybody wishes to have rich savings. For some, they know the savings would come in handy in case of emergencies. For others, it is to achieve a particular goal such as buying a house or a car. Yet for others, it is that the money would come in handy during their retirement age. Irrespective of the reasons a lot of people try to save money, they find out that their account continues to remain empty and they even go into debt. This is because of the biggest misconception for saving money. This article will discuss the biggest misconception about saving to correct the misconception.
Save what is left
The biggest misconception about saving money is that you should save what is left. Thus, a lot of people receive their salaries or payment and then they strive to save what is left. However, it has been affirmed that the wants of humans cannot be satisfied. Thus, they try to meet their needs and their wants before they attempt to save. In the process of trying to do this, they find out that not only has the money finished, but there are some needs they have neglected while catering for some wants. The implication is that they are broke and they need to borrow money to cater to the needs that cannot wait. The loan will come with interest and will be a reduction from their next income. When an income without loan led to taking a loan, how would the next income leave savings when they have to sort loan, sort interest, sort needs and probably more wants. With time, they might find it difficult even funding their needs and then they get trapped in a never-ending situation of continually taking loans. Thus, to avoid cases like this, it is important to be very disciplined when it comes to money and use the right concept of saving money.
The right concept of
saving money: Save and spend what is left
The right concept on how to save money is to first save and then spend what is left. There are two options for determining what you should save. You could have a fixed amount you want to fix every month or a particular percentage of your earnings. Thus, the first thing you want to do is remove that amount. The best amount of your earnings you might want to save is 30 percent of your income. If that is too much, you might want to stick with 20 percent or 10 percent. If your needs are way below your income, you might want to save as much as 50 percent. The bottom line is to be consistent. Once you remove the percentage you want to save, remove another 10 to 20 percent for miscellaneous. You should then spend the remaining, first on needs. Make sure you have enough food and transportation for the month. You can then cater to some wants and leave the rest to subsequent months.