If in recent years, with the economic “bump” brought by the coronavirus pandemictaught us a lesson about money management, is that having some savings on the edge is vital.
And as it states CNBCdespite the importance of saving, surveys show that 45% of Americans they have less than $1,000 on the “edge”.a negligible amount in case of need.
Aside from financial security, there are many other benefits that saving can provide, such as paying off ever-increasing rising interest rates, but also the economic one self-sufficiency and adequacyto broaden your horizons.
The 50-30-20 rule
The typical rule of thumb is to save 20% of each paycheck. This is based on the so-called “50-30-20 rule”, which means that you allocate 50% of your salary to the things that need30% for the things that Would you like and 20% for the savings and investments.
Shon Anderson, financial analyst at Anderson Financial Strategies, says this “gold standard” won’t apply to everyone or every situation.
Another method, he suggests, involves a division 80-20, with 20% of your salary allocated to your savings and the remaining 80% allocated to spending related to your needs and wants. The idea is that the allocation of 20% remains stable in each approach.
Whichever rule you choose to follow, be sure to find a flexible balance between saving and spending. “The point with both of these methods is that the 20% savings is still the priority,” says Anderson.
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