Saving doesn't yield that much at the moment. Yet many people like to have a savings buffer. In case of financial setbacks, you still have some extra money to pay for it. But how high should that savings buffer be? And how much do you save each month? In other words: what is a smart savings strategy?
Step 1: Determine how high your safe savings buffer is. Your savings buffer is the amount of money in your savings account to cover unexpected costs in the event of financial setbacks. You can easily calculate this using the Buffer Calculator from the NIBUD.
Are you self-employed? Then it may be that your savings buffer is higher, because for example you want to be able to cover 3-6 months without income.
Step 2: Determine how much you can save each month. Not everyone saves with equal ease. It depends on your personal situation. People who earn €4000 can save more easily than someone who earns €2100. Your fixed expenses also play a role in how much room you have to save. The higher your expenses, the less is left for your savings account.
The NIBUD uses the following rule of thumb: save 10% of your income. So if you earn €2100, the advice is to save €210 each month. Calculate the 10% of your income and see if you save or can save that amount each month.
Is that quite a high amount for you? It pays to take a close look at your financial situation. Maybe there are expenses you can easily cut back on, and by setting up your finances smartly, you can have more left over.
Step 3: Automate your savings. Now that you know how much your savings buffer should be and how much you can save each month, you can get started. It works best when you put your savings aside immediately, when your paycheck comes in. That way you know exactly how much money you have left to spend that month.
The Flow app automates this completely for you. You can set it up so that when your salary arrives, your savings are put aside. Then you can keep putting your monthly savings into your savings buffer, until your savings buffer is up to par. What does that look like?
- When your salary arrives, transfer €210 to the savings buffer account.
- Top up to €10,000
- Savings buffer full? Send the rest of your monthly savings to the vacation savings account.
This is how you save every month.
In this way, your savings buffer is kept up to date.
And you can then save for other things, or start investing.