“That's what I work for”, “There is only one life and we don't know if we'll be alive tomorrow”, “Money comes and goes”. These are some of the phrases that people use to justify impulsive or unnecessary expenses, forgetting to save, even when they intend to do so to achieve a personal goal.
There is no doubt that for many it is quite a challenge to save, either because they feel that they don't earn enough, because their currency loses value over time, or because they don't understand the power of savings, they succumb to the temptation to be immediate. In addition, this is a skill that is not usually taught either in school or in university, which is why many do not even know how to start putting it into practice.
So in this article we will help you better understand the importance of saving, so that after reading it you feel ready to start saving, even if you don't have your desired salary yet or if you live in Latin America, one of the continents where it is most difficult to access savings.
What is savings?
Savings are the portion of income that is not earmarked for immediate consumption. For this purpose, part of the money that has been earned must be set aside, with the intention of using it in the future. To achieve this, you must create the habit of saving, since doing so sporadically only leads to frustrations because the fund created ends up being insufficient.
Why is it important to save?
You can live for many years without savings, just using your recurring income, however, most of the time the monthly income is insufficient to cover everything you want, but by saving you can create a fund that allows you to make expenses or investments in the future that bring you greater well-being and satisfaction. Savings can even be used as a tool to access opportunities that offer you a better income.
Below we summarize the main reasons why everyone should save.
- It is necessary to achieve goals and dreams: If you dream of traveling, being independent, starting a business, having a vehicle or greater well-being, rest assured that the first step is to save, not to do so will only delay your life plans and goals. So even if today you see it as a sacrifice to stop going out a night out with friends, not going to your favorite restaurant or not buying everything you want, in the long run you will feel grateful for having achieved your goals.
- It allows you to access credits: When applying for loans from banking institutions or independent lenders, it is important to demonstrate that you have had the capacity to save and that you have enough money to be able to meet the payment of the loan.
- It helps you deal with unforeseen events: Health emergencies, repairs to your home or an unexpected dismissal are situations that often occur without warning and that can lead to running out of money or incurring overwhelming debts. Therefore, saving allows you to deal with these unforeseen events in a better way so that the expense is not as significant.
How to start saving if you don't earn enough money?
This is the question that many people often ask, and while it's harder to save when you earn an income that doesn't cover all your needs, it doesn't have to become an impossible task. As we mentioned earlier, saving can become a tool that allows you, in the future, to earn more money.
For example, you can set yourself the goal of saving to study a course or specialization that will then allow you to access a better job and, therefore, improve your income.
In addition, those who learn to cultivate the habit of saving with incomes that are not so high, then have a greater capacity to save and better manage larger sums of money as soon as they begin to generate greater income. While those who think that “only by earning more money will I be able to save” end up being unable to do so, even when their income increases, which often leads them to squander or contract debts that they cannot then repay.
Here's a basic roadmap to help you start saving, even if you haven't yet reached your desired economic level.
- Set yourself a clear and realistic goal
What do you want to do with the money you manage to save? Buying a house or a car? Paying for your studies? Traveling? Have an emergency fund? No matter what your goal is, you must write it down and be very clear about it, so it's important that you inform yourself about the budget you require and establish how soon you want to achieve it.
To be realistic, you must consider a deadline in line with your savings capacity, otherwise you will be frustrated for not having met it.
- Organize a budget
By having a clear objective, you will know how much you should allocate monthly to savings and you will think about it several times before spending that money on a compulsive purchase that won't really help you achieve your goals.
For this It is important that you evaluate how much you spend on basic needs such as food, rent, payment for services and any other expense What you should do on a monthly basis is essential. And of course, include other types of expenses, since being aware of them will allow you to consider whether or not they should be included in the budget.
By knowing your expenses, you can create a budget for how much you will spend in each category, like this you'll make better decisions and avoid overdoing it. It can be very useful for you to use a spreadsheet or some application where you can record your expenses.
- Learn to differentiate between needs and wants
Is going out every weekend to parties or meetings with friends really a necessity? Or does it respond more to a wish? Although you may feel that it is “necessary to clear your mind after so much hard work”, the reality is that this is often associated more with wants than with needs.
Remember that Basic needs are those that you must meet to stay alive. Of course, it's also important to satisfy desires, but identifying which expenses are driven by needs and which are driven by desires will help you choose the ones you should prioritize and remove from your budget those that can be excluded while improving your economic status.
- Save in a strong currency
One of the challenges of saving in Latin America The thing is that over time, your national currency may lose value, which is quite common to observe in countries such as Venezuela and Argentina. To prevent your money from drastically losing its purchasing power, we recommend that you use Some more stable currency, such as dollars or euros.
You can do this from El Dorado, a platform that allows you to buy and sell digital dollars or euros using your local currency, which you get in the form of Stablecoins.
For example, When you receive your monthly payment you can buy the equivalent in dollars of the budget you have established to save, and then, when the established period has elapsed, you can exchange the dollars again for your national currency, so that you can use the money in your country without restrictions.
- Use a single account to save
If the money from your daily expenses and your savings are in the same account, you run the risk of being tempted to spend what you have saved or to confuse how much you actually have available to spend.
To avoid these inconveniences, you can use your account of El Dorado and keep only your savings there. This way you will know precisely your progress and total amount saved, which you can change to your national currency when you need it, using our P2P.
Are you ready to start saving? Create your account at El Dorado, check yourself and start buying dollars and euros in the form of Stablecoins to protect your savings.
