Saving money to buy a house, car, pay college fees, and have an emergency fund is common in regions like Europe and North America. However, in most countries in this side of the world, that seems like a far reality. According to the Development Bank of Latin America -CAF- two of each five Latin Americans save money, most of them do it using informal methods.
This figure is shocking and is a consequence of several factors like lack of financial education, ignorance of methods and alternatives to savings, and mistrust of the national economy. So, in this article, we share with you 5 tips to save money from any country, even if you are in Latin America, after reading it you would be capable of deciding which method fits better to your financial goals.
1.Having a bank account
This sounds like an old-fashioned method, but still works in some cases. To open a bank account you need to go to a bank, apply for a savings account, and if it is approved you earn some money depending on the interest rate and your available amount. It is common to use it to achieve long-term goals or get access to emergency funds. Of course, to use this tool it is necessary to comply with bureaucratic legal requirements.
Hence, this option it’s not too attractive to people with low income because traditional financial institutions impose several entry barriers like a minimum deposit that most of the time exceeds the capacity of an important group of people. Besides, countries with high inflation rates, smash the earnings obtained due to interest rates.
Despite the disadvantages and difficulties of having a bank account, nowadays it is still important to have one, because there is an access door to flexible ways of saving.
2. Access to foreign exchanges
Let’s face it, the majority of Latin American fiat currencies are sensitive to devaluation, so people suffer the loss of purchasing power, discouraging long-term saving and pushing people to make expenses as soon as possible. For this reason, a good option is to buy strong fiat currencies that keep their value through time, like euros and dollars.
This option has become a popular resource in countries like Venezuela, where most people use dollars to protect their money. However, there exists a disadvantage that complicates the access to dollars. Some nations like Argentina, impose high commission rates in traditional financial markets, so it’s hard to get currencies like dollars.
3. Be aware of your expenses
The spending culture dominates Latin America, the society believes that if you are a great spender, you have a good economic position, which in practice it’s not so true. So, being aware of your expenses is the first step to establishing realistic saving goals. This practice includes taking notes of each expense made in a month, specifying the amount, date, and category.
Maybe it sounds like a shallow activity but requires commitment and discipline. If you can make it, you will have a global vision of how you spend your money and will be able to change bad habits and have more money available to save.
4. Set a monthly budget
It doesn’t matter if you want to save under your mattress or in a bank account, you need to set a monthly budget to have money available to save, so it is important to create a detailed budget that includes how much money you want to expense in areas like food, services, education, and entertainment. To achieve this goal you can use methods like 50–30–20 model, The Pareto Principle, or Harv Eker method.
Do you think that it is impossible to set a budget when you aren’t happy with your income? Well, that´s the good news, all those methods can be used to any level of income, because the budget is set in percentages, so if your earnings increase or decrease the proportions of expending-saving won’t change.
5. Use new technologies
Surely you already noted that depositing your money in a savings bank account or buying currencies like dollars and euros through the traditional financial market has certain disadvantages that make it difficult to guarantee financial access to everybody. Fortunately, new technologies make access to saving mechanisms easier.
Nowadays you can keep your money safe in digital platforms that bring down the entry barriers, offering world access to stablecoins and letting you start investing small amounts of money. Among these platforms, one stands out: El Dorado, which is leveraged on Blockchain protocols and counts with a marketplace of euros and dollars -cEUR and cUSD-. Wherever you are, you can enjoy a lot of financial benefits just by using your smartphone, leaving behind all the bureaucratic procedures. You can download the app or create an account here to get closer to your financial goals.