While in other regions of the world it is normal for individuals and families to have savings to buy a car, house, pay for university studies or have an emergency fund. In most Latin American countries, saving seems like an impossible mission., in fact, according to the Latin American Development Bank (CAF), only two out of five Latin Americans save and most do so through informal methods.
This figure is alarming, and responds to events such as lack of financial education, the lack of knowledge of methods and alternatives to save and distrust in the national economy, so in this article we tell you 5 tips for saving from any country in the region, so that you can decide which one best suits your financial objectives and start take advantage of the benefits of savings.
1. Using a bank account
This is a traditional option, you go to a bank, you request the creation of a savings account and you get interest on the amount of money you accumulate in the account, it is usually used for achieve long-term savings goals or have emergency funds. To access this instrument, certain legal requirements must be met, which usually involve cumbersome procedures.
This alternative not as attractive to people with low incomes, since financial institutions impose various barriers, such as the requirement of a minimum amount that not everyone can afford. In addition, in countries with very high inflation rates, interest rates are often insufficient, meaning that people run the risk of seeing their ability to buy their money pulverized over time.
Despite the disadvantages and difficulties of having a bank account, it is currently important to have one, since are a useful tool for accessing more flexible forms of savings.
2. Access to currencies
It must be accepted, many of the Latin American currencies are susceptible to devaluation and therefore people suffer the loss of purchasing power, so it is not advisable to save in the medium to long term, but rather it is preferable to make expenses as soon as possible to make the most of the purchasing power of the local currency. Because of this, an alternative to save is to buy stronger currencies such as dollars or euros, these keep their value longer, so they become a excellent option to maintain the value of your income.
This has become quite a popular option in Venezuela, where the majority of the population has chosen to access dollars to protect your money and not suffer a decline in your income. The only disadvantage of buying foreign exchange is that there are countries like Argentina where there are high commission rates for those who want to buy currencies in the traditional market, so currencies such as the dollar are not usually easily accessible.
3. Raise awareness of all expenses
In Latin America, there is a culture of spending, since it is perceived that the more you spend, the better economic status you have, which is not so true. So this is one of the essential actions that must be taken to set savings goals. To do this, it is necessary to write down in a notebook or even in an application each expense that is made in a month, specifying the amount, date and the category to which each one belongs. It may seem like a simple activity, but it requires discipline and commitment. After this You get an overview of how you have spent your money, which will allow you to change habits to spend less and have more money available for savings.
4. Establish a monthly budget
It doesn't matter if you want to save under the mattress or through a bank account, If you don't set a monthly budget, you'll hardly have money available to save, so it is important that you establish in detail a budget in which you specify how much you will spend on items such as food, payment for services, entertainment and education. For this You can help yourself in different methods such as the Model 50—30—20, the Pareto Principle, or the Harv Eker method. The positive thing about these methods is that they can be used for any level of income, since the figures are expressed in percentages, so if your profits increase, the proportions allocated to savings and spending will not change.
5. Take advantage of new technologies
As you have seen, choosing to entrust your savings to a bank or buying currency in the traditional financial market has certain disadvantages that prevent everyone from easily accessing these options. Although until a few years ago, it was mandatory to create a bank account in order to access savings instruments, new technologies have allowed the situation to change.
Nowadays it's possible store your money on digital platforms that allow access to savings mechanisms in a much easier way, since they eliminate most barriers to entry, offer greater freedom to manage money, access to more stable digital currencies and allow you to start saving from small amounts of money. Among them, El Dorado stands out, a platform leveraged on Blockchain protocols that allows you to access digital dollars and euros (cUSD and CEur) through your smartphone. By using it, you can enjoy the benefits of the financial world without having to carry out red tape, which will allow you to easily save from any country you are in. You can download the app to your phone or enter the website to start using it and get closer to your financial goals.
For LinkedIn: Do you think that saving in Latin America is an impossible mission? According to data from the United Nations Development Program, only 37% of people in the region save, and only 12% do so in a financial institution, although income precariousness is a factor that influences this statistic, factors such as lack of financial education, fragile local currencies and distrust in the banking sector also play an important role in low levels of savings.
Currently, there are several alternatives to deal with this problem, so from El Dorado we want to share with you some tips to start saving if you are in Latin America. Together we can build finance that is more accessible and oriented to the benefit of people!
