Monthly Savings: It's Not as Difficult as You Think

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8-minute read.

Save, Save, Save. You must be sick of hearing this! But it is what we’ve been told since we were young; when all you wanted to do was to spend your $10 pocket money.

Now if you invested this $10 in a Disney share 30 years ago, good for you, you must have been a very smart kid (assuming you still hold that share of course)! But for most of us, the ability to put money aside comes later in life; saving money can be a real struggle for households, particularly in times of economic downturns.

I was recently talking to a friend of mine, who is in her late twenties, advising her to start saving for retirement, no matter how small the amount. Her response was "What’s the point, I could be dead in 10 years!". That’s a pretty grim take on saving and investing, but what she meant was that she’d rather live in the moment, enjoying life without worrying about the future.

We all know that the world embraced consumerism, and there are thousands of ways to spend your $10. And with the current low-interest rates on saving accounts, banks aren’t encouraging you to save either. Let's demonstrate that having a saving routine is not as difficult as you think.


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Regularity is key

Whether you are putting money aside for emergencies or investing some of your salary in the stock market, being disciplined and regular is what will make the difference later down the line. Most people find it easier to put some money away as soon as their salary is paid; which is a lot easier than hoping there will be some left to save at the end of the month.

Warren Buffet, arguably the most successful investor in history, once said: "Don't save what is left after spending; spend what is left after saving."

Revolut Ltd

Technology can help

Many bank applications, particularly online banks, offer cool features to help you save. With the digital banking app Revolut for example, you can automatically transfer any amount to a "vault", at your chosen frequency. Let’s say you transfer as little as $1.50 a day to your vault, and your partner does the same; you’d have a combined saving of over $1,000 after a year. Start small, but be regular.

You might like this: 10 Easy Ways to Pay Off Debt

 
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FIRE: Financial Independence, Retire Early

We will cover this movement in separate blog posts, as it is an interesting but perhaps extreme saving methodology. Some argue that to follow the FIRE guidelines, you need to be a high earner. Indeed, when following the FIRE table, which indicates roughly when you could retire based on how much you save per month, it does show that you’re only a few years away from retirement if you can save 90% of your salary. Whilst you will rapidly accumulate a comfortable nest egg by doing so, who can save 90% of their ANNUAL household income?!

Read also 5-Step Formula to Achieve Your Financial Independence.

 Revolut Ltd

The 50/30/20 Rule

If you are at the beginning of your saving journey, this is a more realistic target. It is generally recommended to split your monthly after-tax income into three categories:

  • 50% Needs: all your bills and monthly commitments which you MUST pay each month. These include your rent or house repayment, groceries, utilities, insurance, etc…
  • 30% Wants: all your "I want to treat myself" expenses, like going to the cinema, shopping, dining out or going on holidays
  • 20% Savings: plan for the future; try to allocate 20% of your net income to savings and investments

Some might already follow the above without noticing; but for others, saving 20% of their monthly income seems unattainable. Start going through your Wants, see what you can cut down on, even temporarily, and move this amount to your Savings allocation.

Full article here The 50/30/20 rule: how to budget your money more efficiently?

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Download free Excel templates

Microsoft Excel comes with some good budgeting templates, fully customizable. We have reviewed these two for you to download:

  • Personalized Monthly Budget Spreadsheet

Streamline how you budget your income each month with this comprehensive budgeting template. Excel does the math so you can concentrate on your finances. It includes an array of categories and subcategories, so you can set it up exactly how you’d like.

Microsoft Excel Icon Download Now

 

  • Monthly Savings Calculator

Once you’ve established how much you can save each month using the first document, use this calculator to track your savings and find out the percentage of your income saved each month. This simple monthly budget template compares your monthly income to your monthly expenses and helps you visualize how they stack up. Remember, saving 20% of your income is the initial goal!

Microsoft Excel Icon Download Now

Revolut Ltd

A closer look at Revolut

Revolut, the global financial super app founded in London in 2015, has surpassed 20 million retail customers worldwide. From easy money management, to travel perks and investments; it is an all-rounder online banking application.

They are continuing to expand their global workforce, topping 5,000 employees globally. Over the past year, Revolut has opened several offices in locations such as New York, Tokyo, Madrid, Barcelona, Paris, Mexico City, Berlin, Budapest, and Bucharest. Additionally, new offices in Mumbai and Bangalore are set to open later this year.

Revolut offers dozens of innovative products including peer-to-peer payments, Saving Vaults, Junior, Stays, and Trading.

Revolut is free to use

Whilst they do offer paid plans with great perks, you can get started free with a Standard account, unlocking many of their money-management tools.

Those familiar with online banking apps would know the main features which come with such apps. I would therefore only highlight my favorite Revolut features.

 

  • Vaults: Reach your financial goals faster

I use that feature exactly as I described above, which automates my savings by putting money aside effortlessly. I also set up a separate vault to round up spare change. When you spend $19.10 with your Revolut card, your account balance is debited by $20.00, with $0.90 automatically sent to your ‘’vault’’. The amount you save this way would depend on the number of transactions you do, but you can easily reach $100 in a matter of months. You can also make a manual deposit into your vault by stashing a little cash whenever you feel like it.

Customize your Vaults to work for you by setting goal amounts and deadlines to make sure you’ve got the money you need when you need it. Open a Group Vault with family or friends and get there faster, together. Whether for a rainy day or a holiday, put money aside in 30+ currencies, including crypto or commodities (not FCA regulated).

 

  • Budgeting and Analytics: Never overspend again

Take control of your money with smart budgeting and analytics tools, which I would call the digital version of my Personalized Monthly Budget Excel Spreadsheet! The banking app lets you set limits to help you stick to your budget. It can even calculate limits to recommend based on your spending predictions, or you can simply enter how much you want to spend.

Every week, you get insights for a deep dive into your spending habits. From trading to savings and donations, this gives you a close look at your financial progress weekly; with a breakdown by merchants, categories, countries, and more.

 

  • Scheduled Payments: Manage subscriptions smarter

This is the one place for all your recurring payments. You can organize subscriptions by adding your scheduled payments to Revolut to track your spending and see where you could save.

Block unwanted subscriptions easily and never get charged for a trial again! The app will detect when free trials are ending and alert you ahead of time so you can decide if you want to cancel.

You will also get reminders for upcoming payments. Say goodbye to surprise charges with notifications if there's not enough money to cover scheduled payments.

 

  • Stock & Crypto: Get investing from just $1*

This is quite a recent addition but you can now invest in 1,500+ global companies’ shares, straight from your phone. From Apple to Zoom, trade in fractional shares (stock portions less than a full share), from as little as $1*.

You’ll then get real-time updates, and be able to explore companies’ performance and market news in-app or get notified when stocks hit your desired prices.

Conservative investor? Read Understanding Risk-Free Assets: A Beginner's Guide

*Other fees may apply, Capital at risk, commodities and crypto are not FCA regulated.

 

And all this, and more, is with the Revolut free Standard plan!

The 3 paid tiers (Plus, Premium, Metal) are worth looking into as they give you added benefits such as (depending on the plan): discounted international transfer fees, free Airport lounge access with Smart Delay, Ticket and Event coverage, no fee ATM withdrawals within limits, etc…

I was personally on the Standard Revolut plan for years, before recently subscribing to the Premium plan, primarily to get overseas medical insurance, delayed baggage, and flight insurance. I find this excellent value for money as I no longer need to subscribe to separate travel insurance, with an even better cover now.

Revolut is just one of the many online banking services available nowadays. Whilst I have no intention to download multiple banking apps to compare ease of use, I certainly feel I made an excellent choice by picking Revolut!

 Revolut Ltd

No Financial Advice. This article does not provide financial advice and has been prepared without taking account of any person’s investment objectives, financial situation or particular needs. Some Revolut features are available in specific countries only.

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