The consequences derived from the pandemic have caused the average salary in Spain has registered its biggest drop in about 50 years, until reaching the 1,641 euros per month, according to a study published by Adecco.
If until then, the Spanish had difficulties to make ends meet, now the uncertainty in the labor field and reduction in income add one more obstacle to saving. But, is it possible in a context like the current one to make ends meet with money in your pocket? The key in these cases does not lie in how the end is reached, but in how to organize at the beginning of the month, for which it is essential to pay yourself before paying others.
First, the budget
Budget and savings go hand in hand. Therefore, if what is intended is save moneyThe first step is to organize the budget. This is what Natalia de Santiago, author of the book Invest in you, a practical Guide to better manage our money and live more calmly than he has spoken in ‘Finect Talks’. “Saving is the real key to the budget,” says de Santiago, who explains that it is one more category within the budget and should be the first to organize.
To do this, it is advisable to be proactive and avoid that savings become what is left at the end of the month, since it is advisable to set aside a fixed percentage of income at the beginning. And what percentage? In this case, de Santiago explains that the ideal is to reserve 20% of the payroll, so that for the average salary in Spain they would be saving about 300 euros per month. Of course, the expert points out: “if that 20% is not available, let it be 10%. If you earn little you save little, but the important thing here is consistency ”.
However. How do you make sure that money is automatically set aside each month? The simplest thing is to have a second bank account that allows you to make an automatic transfer at the beginning of the month once the payroll is received. “As soon as the payroll arrives, you have to set aside the savings always having a realistic goal because there is nothing more frustrating than setting an unattainable goal,” says the expert.
To help in this practice, it is essential to prepare a very detailed budget. To do this, de Santiago suggests preparing it twelve months from now, since the more detailed it is, the less room there will be for unforeseen events.
Second key, the ability to react
Another key to maintaining monthly savings is what Santiago calls reaction capacity. Do you know which of your expenses could be reduced or eliminated if you need more money from one day to the next? Being clear about how far this capacity could go to increase savings and eliminate other expenses will allow for greater leeway in times of crisis to act if needed. “You have to have a reaction capacity of between 25% and 50%”, explains the expert.
Increase savings within the current account It does not seem the smartest thing to do at a time like today, in which accounts and deposits offer practically no remuneration and in which inflation threatens to appear. For this reason, a fundamental step to keep saving and increase it It is the one that goes through investment. “The most important thing is to find out well what is going to be done,” explains de Santiago, who points out that there is still a lot of basic financial knowledge to be able to get the most out of the investment and not to get scared or sell when it is not due.
“It is not bad to spend a little more time choosing that first product to avoid a scare.” Therefore, for those who have not yet experimented with the markets and have not left their bank, de Santiago advises to remove the fear of asking at the office and lose the shame.