Who of you does not want to achieve financial independence? Financially self-sufficient means that you have enough money to do whatever is needed without worrying about your financial condition.
In order to achieve this goal, one of the things you have to do is of course save some of your salary to save. Unfortunately, not all millennial people can do this.
For that, you need to be determined to achieve this. Millennial people not only have to stop some activities, but also have to be willing to “fast” from items that are truly desired. Though actually, if you can manage your finances well, you don’t need to be “miserable” just to save money.
The question is how much percentage of the money you have to set aside to save?
This question has been asked several times by many millennial people. How much percentage of money should you save from the monthly income you get. The percentage rate of savings is the cornerstone in all of your ‘purchase’ decisions. This also affects all other major financial decisions, such as buying a home to an emergency.
For the amount to save, the answer is varied. People who are 20 years old, have a long time to retire so they can save a lower amount of savings than the baby boomers who are just starting to save.
According to the 50/30/20 rule of the ideas of Senator Elizabeth Warren, you have to save around 50 percent of your budget for all installments, which are housing and dining, 30 percent for discretionary, and 20 percent for savings.
Why should it be 20 percent?
According to the analysts, if you are in your 20s, 30s can get an average investment of 5 percent per year.
According to the analysis, by saving at the age of 20-30 years and getting an average return on investment of five percent per year, you have to save about 20 percent of your income in order to enjoy old age.
Different cases if you want to work until the end of your life, then the percentage of savings per month will be less. But of course as millennial people, you want to vacation or use emergency money if something happens, for example if your car is damaged.
Apart from that, however you have to save while you work because if you don’t, we don’t have deposits in old days which causes you to borrow money from the bank when you are already non-productive.
What if you can’t save up to 20 percent of your income?
If you are still unable to set aside up to 20 percent of your salary, you can start with a nominal 1 percent. Then per month or year, it increases by two percent to reach 5 percent. The more up your salary, the greater the amount of your savings.
If it reaches 5 percent, try to push yourself to save about 10 percent of your salary. Even though it sounds very crazy and bound, remember that in the old days you can enjoy the money you collected when you were in your productive age.