How much should you have in savings?
How much should you save each month?
Put simply, your recommended savings buffer is three to six times your net monthly income. Having money in reserve gives you peace of mind knowing that, should they ever arise, you can cover unforeseen expenses, like when your car breaks down or when something needs repairing in your home.
Once you have a reserve, you can start saving towards something specific, such as a holiday or a home, and for your own (and your children’s) future. That seems like a lot of things all at the same time, but even if you can save just a little bit towards each one, you’ll end up with a tidy sum over time.
Once you’ve built up your savings buffer and you know what your saving towards, take a look at your financial situation and work out what you can do without each month. Keep it feasible and remember the following guidelines:
- Compare your income and expenses
- Work out how much you can save and for what purpose
- Ideally, add to your pension savings pot at the same time
- Invest what you can possibly spare
How much should you save for yourself (and your children)?
How much you should set aside for yourself (and your children) depends on how much you can do without each month and what you’re saving towards. After all, saving for a new bike is totally different than saving towards buying a new home. Besides saving towards their own goals with a savings account, many parents also open a Tall Oaks Savings Account to give their children a financial boost later in life.
Once you’ve worked out how much you can spare, you can make life easier for yourself by setting up a savings standing order. This ensures that your, or your children’s, savings account grows automatically over time without you having to think about it.
How much should you pay into your pension savings plan?
Putting away money for your retirement is not only a smart move, it’s also interesting from a tax point of view as you could benefit from tax relief. You stand to gain most if you can save the maximum tax-efficient amount of 990 euros per year. If that’s more than you can afford to spare, fortunately you can start pension saving at KBC from as little as 10 euros a month. So, even when you save a small amount, you could still end up paying less in tax.
How to combine saving and investing
You definitely don't need to have a large sum of money to start investing. You can start really small by investing your spare change or you can put as little as 25 euros a month into a KBC Investment Plan.
Saving and investing can go hand in hand as long as you feel comfortable about your savings buffer and you can still keep saving towards your other goals. Again, it’s all about many small amounts adding up to a large one.