in the times of instability and uncertainty we are going through, it is essential to start building a savings. This is so that we can achieve stability and financial freedom in the medium and long term. In this article, we give you several ideas for savings strategiesfrom everyday methods to investment solutions.
First step: emergency fund
Create one emergency fund should be the first big goal when it comes to saving money. Ideally, this fund should represent the equivalent of at least six months of monthly spending. If you have fixed charges of, for example, €1,000 per month, your fund must have at least €6,000. The essential thing is to be able to withdraw part of your income with some regularity, and create that fund. The purpose may vary. Depending on what you want to do with the money, an emergency fund is mostly used to unexpected expenses that may arise. But there are several ways to put money into an emergency fund. There are those who apply strategies such as placing a certain value every monthor even whoever is putting without criteria. Have many challenges that you can try, like the ones we explain below.
52 week challenge
In a year there are 52 weeks. So this challenge implies that we set aside a value every day over those weeks for a year. But how? O method is simple: in the first week, put a euro aside; in the second week put two euros aside; in the third week, three euros, and so on, until you reach 52 weeks. At the end of the year, with this challenge, manages to raise 1,378 euros. It is not mandatory to start the challenge in January. Can start any month of the year and go forward. Plan so that, in months with greater financial liquidity, you have to put away the higher values. For example, aim for the months when you receive a subsidy that is when the challenge ends.
Challenge of not spending money
This challenge goes through freeze, for a certain period of time defined by you, expenses non-essential. For example, if you are in the habit of buying a lot of clothes, try not buy any parts for three months. Or, if you order takeout frequently, try not to order for a month. Challenging yourself through such a method can help you, in the long run, lose certain consumption habits and become more thrifty. Read also: Saving is just stop spending?
O change challenge it is very common and certainly most people have experienced it at some point in their lives. The goal is to get to the end of the day and put aside all change, coins or bills left over in your wallet. Paying with cash is less and less common, so it’s a more complicated challenge to apply these days. But if, over the course of a year, you collect all the times you paid with money, received change and set it aside, you will surely have a good amount saved.
Five euro banknote challenge
O five euro banknote challenge is similar to the one above. It means that every time you have a five-euro bill in your wallet, you put it in your fund. If you define a certain period of time in which you will apply this method, a year or more, it will be possible to obtain significant long-term value.
Where to apply the emergency fund
The money you allocate to your emergency fund must be invested in safe and easily mobilized products, as you may need the money at any time in an emergency situation. Keeping it in a safe or under the mattress is not an idea, right? Not only is it not safe, it doesn’t generate any returns. Thus, the ideal is that the money is placed in products with capital guarantee, so that you don’t run the risk of losing your savings, and that you can redeem them at any time. Over time, you will be able to make regular reinforcements of your savings and even take the next step and consider some investments with greater risk, but also greater return. Remember, however, that you should never commit your emergency fund – this is to leave in safe products that, although they don’t earn much, guarantee that you won’t lose your money. We give you some suggestions below.
Retirement Savings Plan
O Retirement Savings Plan (PPR) it is one of the products in which people invest the most, to ensure financial stability in the future. It is an instrument that allows make money in the long run. It can be seen as a complement to the reform, but it need not be done just for that purpose. It is possible to subscribe to a PPR at any time in your lifeonce is also profitable in the medium term. Depending on the type of PPR you’ve invested in, you may not need to wait until retirement age to get your money back. But even if you do it for the reform, the sooner you invest, the more profitable it will be long-term. In addition, you can also take advantage of IRS tax benefits if you have a PPR. Has two PPR options: the option where your money is guaranteed, but the return objective is low, and the option where you can significantly monetize your savings, but have no capital guarantee, that is, you run the risk of losing your money. The first type are PPR fundswhere also can choose the fund taking into account the level of risk that you want to run. There are risk-free funds in the market, with guaranteed capital or income, but with expectations of low appreciation, and funds with greater risks, but with expectations of high returns. In this option, you can access the daily value of the participation units on the websites of the managing entities and can transfer the money that you have invested from one fund to another or to another institution. Then there are the PPR insurance where the capital you invest goes to an autonomous fund, which translates into a minimal income, but also without major risks. Therefore, in PPR Insurance, as a rule, you have a capital guarantee, which is the most advisable to apply your emergency fund. Also read: Learn how you can redeem PPR without penalties
You savings certificates are among the financial products that guarantee capital, by the Portuguese State itself, as they are public debt instruments. In other words, by investing in savings certificates, you are lending money to the State, which will then return the capital plus interest. It is an option that benefits from the recent increase in Euribor, since interest is calculated monthly according to the average of the three-month Euribor of the previous ten days plus a percentage point. Currently, interest on certificates exceeds 2%, and due to the prospects of an increase in Euribor rates, they are expected to reach 3.5% next year. What is equivalent to a net remuneration greater than 2.5%, greater than any other capital-guaranteed product. Furthermore, they are a product that benefits from the multiplier power of interest capitalization. This is because, when subscribing to a savings certificate, you receive interest added to the initial capital on a quarterly basis, to generate even more interest. Then, from the second year onwards, an additional charge is added to this base rate. permanence premium of 0.5%, and from the fifth year onwards, a permanence premium of 1%. The current term of savings certificates is 10 yearsbut only have the obligation to keep the money in the product during the first three months. From there, you can withdraw the money any way you want, at any time and free of charge. To invest in savings certificates, you must go to a CTT store to open a savings account at the Treasury and Public Debt Management Agency (IGCP), to which the certificates will be associated.
Us term depositsthe objective is to apply a certain amount for a fixed period, in which you cannot move the money you invested. By committing to keep the money still, the bank pays you a remuneration. But there are two main types of term deposits: simple and structured. both have guaranteed capital, and at the end of the term you receive the amount you invested. However, in simple deposits, the remuneration is calculated according to an interest rate, which can be fixed or variable. That is, when the deposit date expires, you will receive the amount you invested plus interest. It is us structured depositsthe increased remuneration already depends on other factors, may be higher or not even have a return. Therefore, they are at greater risk.
How to choose the best strategy?
There is no best strategy when it comes to deciding how we are going to start saving our money. Not everyone will work for most people.. To choose the best savings strategy for you, so that it is effective, you must put various aspects on the table. Firstly, it must define the purpose of wanting to raise money. For example, if the goal is to achieve medium-term savings, from one year to the next (to buy a house, something more expensive, for vacation), it may make more sense to apply an annual challenge. But if the goal is to achieve long-term savings, to ensure financial stability in the future, it may make more sense to invest your money in a financial product with profitability later on. then must coldly analyze your profile: for example, if you are a consumerist, perhaps the challenge of not spending money is not the most suitable for you. be realistic and fit the savings method what you know you will be able to apply to the letter. Also read: 10 tips to save on food with rising prices