To get money (for an apartment, car, pension), you need to save it. The question is how much?
There are three strategies:
This is the minimum amount to be set aside each month from all of your income. If you can live on 1000$, you can usually live on 900$ and 800$.
If it doesn't work, start with 5%, 1%, or any amount and increase it every month.
It is good to save 10-20% if you are just getting started or are making a little money. The following strategy is optimal.
Many people save up to half of their salary each month. And they have been doing this for decades to provide a comfortable pension (and sometimes an early one).
Yes, they may have higher salaries. So it's easier to put it off when you have covered your basic needs and still have money left over. It's all true, but ...
I know people who earn a lot of money and are on loans, although they could safely save 30% and save for an apartment or pension.
If you earn at least $500-1000 per month, then start saving now. If more - all the more. This is a healthy habit that will lead you to financial security over time. If you don’t start saving now, then most likely you won’t start later.
By postponing 50% instead of 10%, you will reach your goal at least 5 times faster. I say “at least” because we must also take into account “compound interest”.
The following strategy isn't for everyone, but I'll mention it:
Some high-earning people save most of their income. They understand that windfall profits probably won't always happen.
I know one person who earned $1 million for several years. He established a rule for himself “spend up to 10% of his income”. When his earnings fell, he was left with a large amount, which he invested in stock indices in different countries - in a passive strategy.
The majority in his place would spend this money and be left without capital. Like in lotteries, the winners of which become millionaires, and after a few years are left penniless. Or sports stars who make millions and are left without money at the end of their careers.
But even if you don't have windfall profits, this approach can be useful to you. It is good to apply it to large one-off incomes (inheritance, big bonus at work, etc.) because most likely you have a regular income that you live on.
But none of the strategies will work if you don't follow the principle:
This means that at the moment of receiving income, you need to set aside money for your own purposes (“pay yourself first”), and only then pay others. If you decide to postpone it later, there will probably be no money left by that time.
If you have short-term loans, then “paying yourself first” means spending money to repay them. And when you get rid of loans - put aside in the financial cushion and then in investments.
There is one technique that will make it easier to increase your savings.
Let's say you make $ 1000 per month. Start saving 10%, which is $ 100. Then increase your income.
Let's say you increased your income to $ 1200 and now you, as usual, save $ 100 from your $ 1000 plus half of $ 200 (you can spend the other half). Now you are already saving $ 100 + $ 100 = $ 200, which is twice as much as it was. Etc.
This technique is good if you are earning a little now and will greatly increase your income in the future. But if you are already making good money, it is better to slightly increase the percentage of saving every month, regardless of the growth in income.
Start saving 10-20% of your income and, over time, learn to save 30-50% of your income (this will probably require you to increase your income), and during especially productive years, save most of your income.
When increasing income, save 50% of the amount by which the income increased.
Pay yourself first, and then others.