The personal savings rate is lately taking a southward turn as many people are having trouble in stashing away money. Below are some tips how you could avoid some financial dangers:
Experts suggest one common rule of saving and it is called “The 50/15/5,” which mean don’t spend more than 50 percent of your salary on essential expenses like food, transportation and housing, and try to save at least 15 percent of the pre-tax income for retirement along with 5 percent for emergencies.
This mean you are left with 30 percent of your income for the freedom of spending the other ways.
However, following the said rule become difficult for many people as they argue keeping essential expenses to half of the salary is not easy. Take a look to the popular website AmericaSaves.org that discusses more than half a ton ways to save money and one of those suggests to analyze your purchase in terms of hours worked and not in terms of dollars spent.
AmericaSaves is a program sponsored by the Consumer Federation of America and one another tip worth checking is to delay the nonessential purchases for 24 hours or more so that the impulse of buying is reduced. This tip is really easy if you do online shopping as you can save items on the platform to buy later, obviously if you want.
The other tips mentioned there are generic like stick to water instead of expensive beverages while dining at restaurants, design a no-spend day once in a week and set up automatic savings payroll deductions.
The New School conducted a study and found everyone is at risk if enduring occasional periods when the expenses balloon and income dries up due to health crisis, divorce or job loss.
Commissioned by the National Endowment for Financial Education, the study revealed most people endure annual income declines of at least 10 percent and 96 percent of the people in the country see income drop at least on four occasions by the age 70.
The study adds most damaging consequences resulted from long-term illness and work-limiting disability.
These are some of the shocking reasons why you must start saving today and seriously. People who follow the 50/15/5 rule says they live a peaceful life as they know live will not be stressful at times of emergencies and also they can lead life of dignity after retirement.
So, start saving now.
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