Finding out how to save money each month can greatly increase the contributions to your savings funds. Like everything in this life, the most difficult thing is to start. But once you’ve found the tips and tricks that work for you, saving will become a habit, rather than an obligation.
Keep reading and discover the secrets of monthly savings to improve your finances starting today.
How much money do I have to save each month?
Although deciding how much of your income you should save each month will depend on your lifestyle, committing to saving is a matter of mindset. But to maintain that mindset, you have to adopt saving habits that don’t mean sacrificing the things you enjoy.
Once you’ve calculated your monthly income, expenses, and savings budgets to manage your money, it’s important to give yourself a little leeway to enjoy life, but without going overboard. If you deprive yourself of too many things, you will fall into a psychological phenomenon known as the “all or nothing” mentality and jeopardize your savings goals.
Avoid the “all or nothing” mentality
The thought of “all or nothing” usually presents two diametrically opposed faces. When it comes to saving, this assumes that you either meet or even exceed your savings goals, or you don’t save at all. This is an experience that is also shared by many people trying to stick to a strict diet. If they reach their dietary goal that day they are satisfied, but as soon as they deviate even the slightest, they go on a food binge, as the goal now seems impossible to them.
Therefore, when your savings goals are too ambitious, you are bound to fail. When you fail to reach your monthly goal, which is unavoidable, your savings plan will most likely go down the drain. You have to change your mentality: saving a single euro a month is already better than nothing!
The trick is to find the middle ground: make your savings goals demanding, but not impossible, so as not to get discouraged if you don’t reach them for a month. Consider your savings as a long-term investment in your future. Although there will be setbacks along the way, any contribution is better than nothing.
If you are looking for an affordable budget that is easy to remember, the 50-30-20 rule can be of great help. The 50-30-20 rule, created by Senator Elizabeth Warren when she was a law professor specializing in insolvency, proposes that you divide the monthly expenses according to the following rules:
- allocate 50% of your gross income to your needs, e.g. eg, rent, consumption, credit amortization;
- allocate 30% to your whims, p. eg, eating in restaurants, gym, vacations;
- allocate 20% to your savings goals.
Use our 50/30/20 calculator to calculate amounts automatically.
How much of my income should I save each month?
According to the 50-30-20 rule, you should save 20% of your income each month. If you have a fixed and stable income, one of the smartest ways to do it is to automate your expenses every month. This means automatically sending 20% of your monthly income to a special savings account.
In this way, you will prevent that money from being available in your bank account until you manually transfer it to your savings account and, therefore, you will reduce the probability of ending up spending it.
What are the average monthly savings?
According to Eurostat, the average net monthly income of an EU citizen is €1,473. If we apply the 50-30-20 rule to this figure, we get the following breakdown:
- €736 goes to necessities (ie 50% of income);
- €441 goes to whims (ie 30% of net income);
- €294 goes to savings (ie 20% of net income).
According to these figures, if the majority of EU citizens followed the 50-30-20 rule, the average monthly savings in Europe would be around €300, or around €3,500 per year. For many, this money would constitute a considerable emergency fund, or a not inconsiderable contribution to the repayment of their outstanding debts.
Tips to save money each month
Now that you’ve got an idea of how much money you should set aside each month, here are a few tips to get you there. But he remembers: while doing everything we’re going to explain is a great way to start saving seriously, trying to do too much at once can be counterproductive.
It is best that, to begin with, you choose the tips that seem most achievable according to your situation. Then, when they become a habit, start integrating other saving practices into your routine.
Start paying off your debts
It may annoy you to hear it, but until you start paying off your outstanding debts, it will be difficult for you to save money properly. But if you apply a method like the 50-30-20 budget and allocate 20% of your monthly income to pay off your debts, you’ll be surprised how quickly you can get out of the red.
Your bank balance is not the only thing that will gain, but also your mind, since you will feel more financial independence.
Save money on utility bills
Cutting back on consumption each month can free up a considerable amount of money. The main culprits are electricity and gas bills. Therefore, you should make it a habit to compare providers from time to time to see if you can benefit from lower prices from another company.
You should also take into account the following to save on your electricity bill:
- use LED bulbs, as they consume 90% less energy than standard models;
- change appliances that are not energy efficient;
- regularly monitor your energy consumption to detect areas where you can reduce it or
- Do not leave electrical appliances on standby.
Save in the shopping cart
There are many ways to save at the supermarket. To begin with, it is best to create a weekly meal plan, so that you know exactly what ingredients you need to buy before going to the store. If you stick to a strict shopping list, you will be able to stick to a stricter budget.
Another very valuable tip is to do mental calculations while you shop. In other words: every time you put something in the cart, keep track of how much the items you are buying are worth. To make it easier for you, you can use the phone’s calculator.
Although perhaps one of the best tips we can give you is not to go to the supermarket hungry. Nothing better to ruin your shopping budget than an empty belly that encourages you to fill the cart with expensive packaged snacks.
Reduce the phone bill
Lowering your phone bill each month can add a lot to your savings. There are several ways to do it:
- Before you buy the latest model, ask yourself if it’s worth upgrading to a new phone when the one you already have works perfectly;
- If you’re buying a new phone, pay for it outright instead of including the price of the phone in your monthly bill, as phone companies often inflate prices this way.
- compare prices between several suppliers until you find the best offer or
- Before you commit to a contract that includes a myriad of benefits, honestly ask yourself if you’re going to get enough of them to pay for what they’re worth.
Cancel subscriptions you don’t use
Many companies make the bulk of their money from subscriptions. Why? Because, as soon as people hire them, considering canceling them makes them lazy, when, in practice, it is usually a simple process with which you will save a good pinch. The trick is to ask yourself the following questions to weigh whether a subscription is worth keeping:
- How often do you use this subscription?
- Is there a cheaper alternative?
- Will not having it affect your life significantly?
If your answers lead you to conclude that you don’t use the subscription very often or that there are cheaper alternatives and you also don’t lose anything by not having it, it’s time to cancel it.
Second hand purchase
If you have to buy a new item, consider buying it second-hand. Without losing too much in quality, you will often find fantastic deals that will save you a bit of money, but you will need to be patient.
Whether you’re looking for clothes at a thrift store or a specific item on an online marketplace like Wallapop, it takes a keen eye to spot the real bargains. Of course, when you find it, we assure you that the feeling of getting the most out of your money is priceless.
If you’re serious about saving, our bank account has everything you need. Not only will you be able to set daily spending limits that will help you stay within your budget, but you will also receive push messages every time a transaction is made in your account.
Add to this Spaces, which allow you to create multiple sub-accounts with specific savings goals, and our Statistics feature, which ranks your spending habits, and you’ll be hitting your savings goals in no time!