You know savings is nothing if it doesn’t have a purpose. You don’t want to save money just because it is a good idea. You need to tie your savings to something you really wish to achieve within a period of time.
So, if you’re saving now, or you just realize the importance of savings, you need to ask some questions to help you make the most of the savings.
1. How much can I afford to save?
If you’re saving a certain amount at the end of the month, you have to make sure you’re consistent with it. Try to determine how much you can save that won’t affect your monthly upkeep. And if there’s anything you subscribe to that may prevent you from being consistent with your savings, try to cut it off to allow you save well.
2. Should I set savings goals?
There’s no point saving money if it’s not tied to a goal. Why would you save money if you don’t what to do with it? Once you start saving, the first thing is to name your goal and how soon you wish to reach the goal. This is a balance between how much you can save and how long you wish to save for.
3. Should I be saving when I have debt to pay off?
Savings might be very important to your personal finance, but it makes more sense to pay off your debt before you start saving. Once you clear your debt, you are free to save more and faster without being haunted by creditors.
4. Should I invest or save money?
The decision to invest or save money is largely dependent on your financial situation and goal. Investment comes with little or no risk but it grows your money faster than savings which only keeps your money safe and grows it slowly.