The most difficult way to deal with our own savings is to take care of yourself week by week, month to month, Think about having to put yourself away every week, you have to pay 52 × 5 = 260 times over five years, averaging 5 minutes 1300 minutes or 21.66 hours of your life! Compared to this, an automated savings system can provide us with a reassuring solution…
We can save money from what we do not see. Because what we have in our hands, we tend to find a “better goal” …
Step 1 – What is Income?
The basis for building our automated savings system is to clarify what income we are actually managing and what should not be taken into account! It is a common mistake to consider all of the money we receive for our income.
Important: From the point of view of saving, only regular (and planned) money is counted as income. Occasional money (rewards, inheritance, extraordinary supplements) are not included in this set because they are not sustainable
We can draw a very important conclusion already. That is, because we earn $ 600,000 a month, it doesn’t mean that our regular income is the same. From the point of view of our automated savings system, we can only count on items that basically cannot “fall out”, “do not decrease”, “not linked to a period”. Always count on the Commissioner. What’s more, you can go to your occasional savings account.
Step 2 – Find a provider for your goals
In the automated savings system, financial service providers who are able to make financial products that fit your goals play an extremely important role. It is true, therefore, that you have to pay the costs in return, but it is basically the price of having a private “supervisory body” that warns you if you want to leave the road you have defined.
Many people underestimate financial contracts as an unnecessary commitment. In contrast, a homeowner, a bank, or an insurance company is legally authorized to “head on” if we miss. For many, this annoying power is one that saves long-term contracts from mild and total bankruptcy.
For all saving purposes…
you need to find a stable provider where it would be necessary to set up a regular transfer order . Automation means precisely that the system will launch our savings payments at the beginning of the month by itself, from our assignment. So we never slip, we’ll never forget, and we can never “spend” this money on anything else!
Experience justifies this. If you do not come with a savings check, there is no automation set, then you get bored after a while, we forget this “game”. However, if we set up the system and ignore it, we simply realize that we have collected a significant amount!
What makes regular savings? – or the essence of an automated savings system
The savings are called when we put the same amount at regular intervals. I’d like to break this down and I would call regular savings for our automated savings system that meets the following criteria:
- for a specific time horizon
- we pay a specified amount
- we contract with a financial service provider
- we want to achieve a definite goal with it
When you don’t need a provider
I would like to draw your attention to the financial envelope system, which in turn can provide a fantastic solution for your everyday life. So you can use this envelope system for your savings goals that are typically short-lived like a vacation, a new electronics device, or a 1-2-3 year car. In this case, it is not worth choosing a financial service provider, because the time is too short to turn your money into risk-free!
Step 3 – Automate Liquid Savings
Maybe I haven’t said much about this point until now, because it’s not a big magic to sign up with someone and then pay the checks. However, many do not know, but we can also automate and make predictable, designable liquid (ie accessible) savings.
To do this we need to do as a regular and fixed monthly subtract our expenses (utilities, loans, food, travel, regular savings, etc …) bevételünkből regular in the first point, then X per cent of the remaining amount is “appointed” for the amount of liquid in the reserve.
How much should it be?
Your regular income is $ 600,000. Your regular release is $ 350,000. The remaining 250,000 HUF takes you 10% (25,000 HUF), which you separate and divert to a separate current account for this purpose . Redirection means you give your bank a regular transfer order so that every month (as long as this income position goes down, if you decrease it, if you grow it, you increase the amount of the order) just as “transfer” that amount you would pay your regular savings.
So you create a “check” for a mandatory financial instrument. It will be a money that you will not hold in your hand, and after a while it will not “miss you” because you get used to the fact that this amount is unavailable, does not exist.
This is just a liquid one
It can be seen from the table that, without interest (and without costs), besides the given level of income, we can build up the visible amount of money from the automated liquid savings system very soon. Virtually “unnoticed” a 7-digit amount is collected after a few years.
We can see that this amount alone can provide sufficient coverage for us in an emergency. The twist, however, is precisely the fact that this is our regular liquid reserve, our liquid money that is unavailable to it. Because liquid will be an integral part of the system…
Step 4 – Liquid 2
Many are very proud of their savings while not developing their own portfolio. Because we can not only build a portfolio in our investments, but also in our entire savings system. It would be important to break down the money set aside for different purposes, such as the liquid reserve from a planned automated element (a fixed percentage of our remaining monthly income) and compiled from an ad hoc element.
The ad hoc element is called liquid 2 reserve.
That is, the part of our income that is / will not stay in every month will go to this account / secret place, because it depends on our monthly spending. They used to say:
Do not put aside the money that remains from your spending, but spend the money that remains after your savings.
And what about the item that remains after saving and spending? It is not lawful to always spend all the money. Instead, create the liquid reserve, which specifically focuses on the remaining amount at the end of the month. This will be the ass that we first touch if we need extra money.