In saving (always) is the gain

When Portugal asked for international financial assistance in 2011, the main indicators of the national economy deteriorated sharply. GDP sank and unemployment soared, in a deep recession that led to a sharp drop in disposable income and household consumption expenditures.In view of this blackboard, the more to be expected would be to see Portuguese families reducing their level of savings. Well, the exact opposite happened.. The savings rate in Portugal (weight of gross savings over disposable income) went from 8.2% in the third quarter of 2021 to more than 10% about two years later. only ended at the end of 2014, the Portuguese preferred to cut back on spending and reinforce savings. Despite having less money in their wallets each month, in 2013 Portuguese families were saving €2 billion more a year than before the troika’s intervention. While surprising, this strategy makes sense. More maladjusted was the later behavior. Once the economy started to improve, with disposable income entering a downward trajectory, Portuguese companies put a stop to the savings effort. The rate reached a decade low of below 6% in 2017, with the gross value falling to almost half of that recorded at the peak of the troika crisis. A pandemic had to come for families to save seriously again. In the 12 months following the first cases of covid in the country, the Portuguese set aside almost 20 billion euros, which represented 13.4% of disposable income and the highest savings rate of this century. When the economy started to recover last year, savings plummeted and are now below 6%.There are two mitigating factors for this behavior of the Portuguese during the pandemic. The closure of a number of activities due to restrictions forced a reduction in expenses, so families were left with more money in their pockets. The sharp rise in inflation, as of last year, increased the cost of living, drastically reducing savings.

Savings in Portugal are among the lowest in the EU

The analysis of these two most recent moments of the Portuguese economy serves to validate the idea that the Families are ants during hard times and turn into cicadas when slack is longer. The graphs above are quite explicit in this evidence. Uncertainty justifies a cautious attitude in difficult times, but it makes no sense for families to lower their savings levels when the economy is growing. This behavior is not a national exclusive, but it becomes more problematic taking into account that the Portuguese have a poor track record when it comes to setting aside a slice of income.In 2020, when Portuguese savings reached maximums and the economy suffered a deep recession due to the pandemic, the rate was the fifth lowest (11.9%) among European countries and well below the European Union average (18.36%). Going back three years, when the Portuguese economy grew by more than 3%, the savings rate in Portugal was the sixth lowest in the EU.

Saving is a marathon

The best way to gain healthy savings habits is to face the goal like a marathon. It’s useless to do a few sprints if, later, during parts of the race, you go for a walk. keep pace and adjust cadence to account for effort. Accelerate on the descents and then have room to slow down when the road starts to slope. In saving, the logic must be the same, taking advantage of the wind at your back to face the most difficult periods. Save now so you can spend in the future. It’s not an easy task, but there are several ways to discipline your savings habits in order to ensure that they are regular and adequate to your needs. Also read: Saving or investing: what should I do?

Family budget

Planning is essential to having an effective savings plan and there is no better way to plan than to have a good family budget. Through specific applications or a simple spreadsheet, gather all expenses, whether regular and extraordinary, essential or leisure. Combine the various sources of income and find out how much you can save each month.The share you set aside each month depends on your personal finances, but look for inspiration in the various rules that are pointed out as appropriate. One of the best known, called 50-30-20, says that we should apply half of income on basic expenses, 30% for indiscriminate spending and the remaining 20% ​​for savings.Essential is that you define a objective that is realistic and ambitious, to then be executed to the letter. If you don’t get it, it’s a sign that the budget is poorly designed, or it’s not fulfilling what you set. Also read: The importance of (knowing) saving

‘Pay yourself’ and automatic transfers

There is a rule that helps to execute this plan of saving money on a regular basis, known as pay yourself. Pass by view savings as an expense, putting aside a certain amount when you receive your salary – and not what is left over at the end of the month. Ideally, you don’t even see this money. The easiest way to implement this strategy is to establish a monthly transfer of the money you set to a bank account where you add your savings. In your day-to-day account is the money needed for fixed and variable expenses. Also read: Savings account: What are the advantages and disadvantages of opting for one?

Apply for the long term

At savings we make every month must have multiple purposes. An emergency fund, a purchase you want to make in the short term, a car in a few years, a second home for the medium term. And of course, also for reform. Whatever the objective, savings must be applied in a long-term logic, so that the risk is as low as possible and the returns more attractive. Like savings, application of your money should also be seen as a marathonin which the result will be the mirror of the effort you made throughout the race (life).

Save on everyday expenses

Another very typical habit of the Portuguese is to only reinforce savings in day-to-day expenses in times of crisis, or when prices rise sharply. shopping at the supermarket, energy, fuel, etc. The list of tips to save is long, you just have to put it into practice. In times of crisis, but especially when the economy is growing.Also read: 10 tips to save on the supermarket bill Born in 1977, he has been a journalist since 1999. He began his career at Jornal de Negócios, where he spent more than 20 years, occupying various roles, always focusing on online. He is currently an independent journalist, subscribes to the daily market newsletter Morning Call and collaborates regularly with ECO. Graduated in Management at ISEG, he has a special interest in everything related to the financial markets.