When it comes to saving our hard-earned money, follow this rule: save as much as you can.
While supporting the art, music and the amazing local organic vegetable scenes are legit, other than spending on those essential items - for happiness - try your best to conserve the rest.
Saving a percentage of your salary may allow you to build your wealth consistently, and while the capability of saving differs from one to another, here is a guide of how much percentage you should save each month according to your financial situation.
1. The 50-30-20 rule
Depending on which side of the rule you want to take, the minimum percentage of salary that you should save is 20%, and then gradually work towards saving at least 50% of your salary.
The best is to spend only what's necessary and save the rest, but having a number as a goal will set the tone for a good start towards sound personal financial management in the long-term.
2. Start with 20%
If saving is not your forte, start straight up with saving 20% of your salary. Adjust your expenses to suit that amount regardless of what excuses you may make regarding your current financial situation. If there are certain obligations that are already running that eats up a big chunk of your salary, give yourself 3-6 months to organise those obligations. If downgrading your lifestyle is necessary - which mostly is - downgrade by all means. Although it may seem hard for the ego, soon you'll find living with less may be a blessing.
Always live by the wealth you can create, and there is nothing to be ashamed of to use a second-hand item if that's only what the wallet can afford at that moment, rather than you working for debt. A sharing economy - where sharing things are economical - will also bring about other benefit such as enjoying better social cohesion.
3. After a year, increase to save 30%
Now for many people who say saving such a percentage is impossible on a low salary. Let me share with you a story - and I assure you, it is doable.
When I was a student, saving 30% on a monthly stipend of $1350 seem like an impossible task in a high-inflation city like Singapore. So, I had to be creative and in other words, very hardworking, to get a part-time job. Also, I had to move back to my parent's home when it is the semester holiday to save on rent - which was rather expensive, at $1000 per month. It wasn't a fancy place, it is just a room as part of the school's accomodation which happened to be located at a prime area - an area which has developed rather rapidly over the five decades since its inception.
It would have been possible to move to other places, with cheaper rent, but considering the frequency of my classes and everything else such as transportation and preference, it wasn't very convenient to reside in other places. But the point is, yes, even on a low-salary, saving 30% is possible. I've saved that much throughout my entire study period.
4. Go up to 50%
It's up to how you want to do this - various combinations of living style that can make this possible. People on a full-time job should have this the easiest, with a regular and predictable income source.
The entire point of saving your salary is really not so much about saving, but to really spend on what you absolutely need. Because hey, we never know what happens tomorrow, and having a good reservoir of cash will allow you to purchase big ticket items without getting a loan - which will save yourself a lot of interest payments.
5. There're people who save up to 85%
If you are already one of them, congratulations as you are on your way to early retirement. Even if retiring is not an option because you would like to work until you die - which can be very healthy for the mind and body - having to work without any financial stress is really a great and liberating feeling.
Conclusion
Always spend on only what you need and save the rest. And if you don't know where to start, start with 20%!
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