June 29th, 2024

Welcome back to "Financial Friday," everyone! 🎉 Today, we’re discussing your savings portion in your budget or financial plan.
 
How much of our budget should we save monthly. This rule advises that you save at least 10% of your net income each month. We will dive into why this rule is so powerful, how to implement it, and some practical tips to ensure you stay on track.
Why Save 10% of Your Net Income? Here are a few reasons:
Building an Emergency Fund:
Life is unpredictable, and unexpected expenses can arise at any time. Having an emergency fund equivalent to three to six months of living expenses provides a financial cushion that helps you avoid debt during crises.
Achieving Financial Goals:
Whether its buying a house, starting a business, or planning for retirement, saving consistently helps you accumulate the necessary funds to achieve these milestones.
Reducing Financial Stress:
Knowing you have savings set aside can significantly reduce financial stress. It gives you peace of mind and a sense of security, allowing you to focus on other aspects of life.
 
How to Implement the 10% Savings Rule
Calculate Your Net Income:
Determine your net income by subtracting taxes and other deductions from your gross income. This is the amount you take home each month. Remember what we talked about week 1 where your money should go. 
Fixed cost should be no more than 50-60% of income.
Investments 10%
Savings 10%
Guiltfree spending aka fund money$$

Set Up Automatic Transfers:
Automate your savings by setting up a direct transfer of 10% of your net income to a savings or investment account. Automation ensures you save consistently without the temptation to spend. This is one of the hardest things for me too.
Track Your Spending:
Use budgeting tools or apps to monitor your spending. Understanding where your money goes helps you identify areas where you can cut back and save more.
Prioritize Saving:
Treat your savings as a non-negotiable expense, similar to paying rent or utilities. Prioritizing saving helps you build the habit and ensures you always allocate 10% of your income to savings.
Practical Tips to Stay on Track
Start Small if Necessary:
If saving 10% seems daunting initially, start with a smaller percentage and gradually increase it. The key is to start somewhere and build the habit. You can always increase the saving percentage based on other things in your plan.
Increase Your Income:
Look for opportunities to boost your income, such as taking on a side hustle, freelancing, or seeking a raise at work. Increased income can make it easier to save more.
Review and Adjust Regularly:
Periodically review your savings goals and progress. Adjust your budget and saving strategies as needed to stay aligned with your financial objectives.
 
The 10% savings rule is a simple yet powerful strategy to help you achieve financial freedom. By consistently saving a portion of your income, you build a strong financial foundation, reduce stress, and set yourself up for long-term success. Start implementing this rule today and watch your financial future transform. Thats it for this week. Now go have a great weekend.