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3How much money do I need to save per month?Jan-24-2020

How much money do I need to save per month?

Blog by – Mr. Ashish Ajmera
With 2020 kicking in, everyone wants to get closer to their goals and resolutions. A lot of people vow to make new year investments. Now everyone starts to invest by talking to people around them who invest and understand what works best. What one needs to understand is that there is no fool-proof way of investing money. One can start investing in mutual funds, try online market trading or find the best stock broker online. The end goal is to save money. While there is no specific way for all, there are certain guidelines one can follow.

Now what is the reason people start these new year investments? It is to be financially secure, to have a comfortable retirement while having a fun time today. Of course, it is difficult to start saving with bills, loans and other expenses to take care of.

To understand how much investing you need to do in mutual funds, online market trading or whatever means, we will define three broad areas you need to save for. This will help give you an overview of how much you would need to save, as per your salary.

Emergencies
One never knows when something bad can come their way. So, you should always be prepared for the worst. Hence, an emergency fund is an absolute must!

Why? Because a heavy doctor’s bill should not collide with your bills or drain your credit card. So start hunting for the best stock broker available online. In case of an emergency, your personal life would not get affected as much if your savings break-even with your earnings over six months.

Mutual fund investments are subject to market risk, but not investing is a risk for emergencies. Start investing this new year, slowly and gradually. Remember to understand the market, analyze your spending patterns and gauge for improvements.

Retirement
Until and unless you work in the government sector or have a tenure, you should be saving for a happy and comfortable retired life. In fact, even in the government sector, one should always be prepared, just in case there is an unseen major official change or downsizing.

The earlier you start saving for your retirement, the more money would be accumulated by the time you retire. So, start today!

Somewhat less of a quarter of one’s annual income should be going into online market trading, trading of their choice or into any other form of savings.

Again, putting aside that percentage of your salary could seem daunting, and it is. But, you need to start somewhere. So start by saving 5% and work your way up.

Houses and other future goals
While saving for the above two categories is important, there are other goals that you might have for your future. It could be planning an expensive trip, a house, a car, having children, paying for children’s education, supporting elderly parents, and well, so much more!

Saving for all these goals has to start as soon as you realise that these are your goals. Your new year resolution could be deciding on these long-term goals and your new year investment could aim at starting to save for them anyway.

Since these goals are tangible, and you can probably see an effective timeline, saving for it is much easier than the other two. To understand how much you need to save, calculate the amount you would need and then to see how much you need to save per month, follow this simple math: Divide the amount of money by the amount of time left to save. It will give you a definitive amount per month. If it seems too daunting, you can increase the timeline to reach your goal.

After having discussed these broad areas you need to save for, we know, it is scary and sounds difficult, but it happens by itself once you start. Investing in the trading market is one way to start saving money, other than buying gold and other assets. To understand mutual fund investments or the stock market could take a while. But, it takes little to find the best stock broker online!

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