When one thinks of the future, it’s always best to plan ahead. There are many things that can occur in anyone’s future that is unforeseeable, and then requires a large amount of money for payment. So the question is save or spend? How much money should be saved each month? In order to answer these questions, other questions must be posed. What is the ultimate savings goal? Also, is there a specific purpose for the savings? For those who currently are employed, and see extra money at the end of the each paycheck, savings is a possibility.
A home is the biggest purchase any person can make in a lifetime. Even with financing, a down payment is usually required or recommended for a home purchase. When saving towards a home, a good down payment is anywhere from $5000-$25,000. Although each home may vary in down payment requirements, it’s always best to put as much money down as possible, to keep monthly payments lower, and to have a home paid off quicker. These are standard goals that most in life want to achieve, but if one chooses to save or spend, how much is appropriate?
When starting a savings account for any reason, 10% is always a good starting point. If the monthly paychecks total out to $2000, earmark $200 for savings. With a minimum of 10% being saved each month, one can look forward to $2400 in savings by the end of the year. Of course, there are things that can come up in life that will end up costing money out of savings. A death in the family, car breakdowns, home repairs and more, may suddenly cause one to have to dig into their savings account.
Even if these sudden occurrences plague one in life, it’s always best to get right back on the horse and continue saving when possible. When considering to save or spend, if one is trying to bulk up their savings account, there are several ways to do this. Investments require spending, but overall will lead to savings. If an investment can be found that is reliable and lucrative, the money spent can then be put into savings once returns are received. Spending money to start a small business can also lead to profits, which can later be put into savings.
If possible, it’s always best to have other savings plans in mind such as a 401(k). Retirement plans, life insurance policies with a return on premium, also automatic savings deposits from paychecks can help anyone save money that they need for the future.