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Personal Savings

The importance of saving cannot be over-emphasized.

We live in a consumption-driven world, where the theme of the day is often to spend as much as much you as you can.

The idea of "saving" is often regarded as "out of fashion", outdated or even an old methodology. Saving sometimes even carry the stigma of being applicable only to the poor.

The truth is that one cannot be financially independent without savings or some sort of emergency fund.

Whether rich or poor, life can through you a curveball, and if you suddenly needed funds for an unexpected event, your entire financial plan may be derailed if you do not have sufficient savings.

In this event, you might find yourself queuing for a loan at a bank to cover this unexpected event. This loan may be repayable for the next 5 years and that is where your financial troubles begin.

On the other hand, with sufficient savings, you can easily walk away from life’s many curveballs without ever stepping foot at a bank to request for a loan.


How much should you save?

It is often said that saving 10% of your monthly salary is a good starting point. However, this is based on your financial circumstances, aspirations and goals.

Your total savings should at least be 6 months’ worth of your living expenses. So if your current living expenses amount to R15000.00 monthly, a good saving-base would be R90000.00 of liquid savings.

You might think of adjusting from the traditional 10% saving amount after considering how long it will take you to save 6 months’ worth of your living expenses. For instance, if you need to save R90000.00 in total and your monthly saving amount is R2000.00, it would take you 45 months (nearly 4 years) to reach your goal of R90000.00. This might be too long for some people and therefore saving more might be necessary after considering the time aspect.

Whichever way you look at savings, being financially stable and being financially independent will require you to have sufficient savings that can be accessed within a short period of time. Maintaining your savings will also require a great deal of discipline.

Remember, ill-discipline never made anyone successful.