How to Be a Better Saver: Practical Tips To Build Long-Term Wealth

My sister asked me an interesting question the other day. Is she saving enough? That prompted me to address two topics:

1. How much should you realistically save?

2. How much is enough?

I asked my Instragam followers how much they save every month, this is what they said:

The majority save at least 10% of their salary every month, which is a good start. The aim should be to save (and invest) at least 15% of your gross salary. Depending on your financial situation and commitments you should save more.

For example, freelancers or business owners with income fluctuations should save 30% - 50% of their income. This ensures you have sufficient savings for living costs in months when income dries up.

I also asked my Instagram followers when they save, and 80% said they put money aside as soon as their salary is paid in. This is good practice and I believe a crucial step toward committing to saving.

Something that is not a great practice, is that the majority of them only have a vague idea of inflows and outflows:

Personally, I only took control of my finances when I set up a detailed budget which I revisit every month.

We’re told from a young age to save, with very little guidance on how to do it.

These three things helped my savings:

1. Set a savings goal.
   Calculate 15% (or more - as per above) of your gross salary and commit to that. Include it in your budget and prioritize it as an outflow.

2. Set savings aside as soon as your salary is paid in.
   Use a separate account to “lock” your savings in so you can’t be tempted to use it! Even better, set a debit order up on the day your salary is received every month for the amount you’re committed to and transfer this to your separate savings account.

3. Accountability.
   Get a friend or family member that you share this goal with. Ask them to check in with you to ensure you're sticking to this goal and perhaps even challenge them to join you. This also helps your family and friends understand when you’re not as keen to spend on entertainment, food or holidays as you used to.

The next topic to address is where you hold your savings. Saving serves a two-fold purpose: to have cash in case of emergency and to invest to grow your wealth. Holding too much savings in cash is not smart.

Thereafter, we will look at how much you should have saved up for retirement.

An exciting agenda indeed!