As soon as the funds are deposited, the savings will have greater value-added space over time. After graduation, the moment you start to make money is the critical moment for you to carry out your financial planning and move towards different goals. The following five steps of financial management will help improve your savings potential.
Step 1: Initiative is better than automation
It is not easy to remember to save money. However, as long as you turn your monthly savings into part of your schedule, you can achieve your financial goals faster.
By setting up direct payment instructions or standing instructions, you can enable the system to automatically put a specific amount into savings when paying salaries every month. Even if you are busy that day, you will not forget to save money.
Step 2: Reserve contingency fund
One of the keys to maintaining financial health is to prepare emergency funds for yourself. This amount should be enough to cover the living expenses for 3 to 6 months, so that you can face the unexpected situation in the future.
This emergency fund can help you cope with unemployment or sudden pay cut. With this fund, you can not only meet your daily expenses, but also lose your long-term savings plan before you start again.
Just to mention, do not withdraw money from the emergency fund for non emergency purposes, such as buying new handbags or taking a five-star holiday. Be patient even if the temptation is great.
Step 3: Anticipate the time to use money
When the emergency fund can operate on its own, the next step can be to upgrade the savings plan and clearly set out each of your savings goals in the financial plan.
Step 4: Make good use of investment tools to invest in the future
When you have saved enough emergency funds, you can consider using part of your monthly savings for investment.
You should consider investment as a long-term financial strategy, or to achieve long-term goals, because usually the longer the investment period, the more time you will have to recover from the market recession.
In the long run, the return on investment is usually greater than that on savings, but the return is not guaranteed. This means that your capital may increase or decrease, and your return may be less than the principal.
Step 5: Master short-term goals
What are your savings goals? Save for a family? Marriage? Travel? Or to study for graduate school or prepare for the down payment of house purchase? If you are saving money for a short-term goal (for example, within 5 years), it is more appropriate to deposit this money in a savings account or choose an investment with high liquidity.
Although the return on investment in high-risk products is usually large, you also have the opportunity to suffer greater losses. If your funds are not in urgent need, you can transfer your deposit to a fixed deposit account, a fixed deposit account, and then you can earn a slightly higher interest rate within a specified period of time.
Conclusion
According to the above methods, you can generate more value from your savings and realize wealth freedom faster.
