1. Take stock of your personal situation
Before thinking about saving a penny, it is essential to take stock of their personal situation. How much do you earn per month? What are your fixed, non-modular expenses? Do you have outstanding credits? Depending on these criteria and what you have left, you will therefore be able to know more or less what you have left as money available each month. This step is mandatory to establish a sustainable savings plan.
2. Set a budget
Granted, digging into expenses and spreadsheets isn’t very fun. But if you want to save a little each month without getting into trouble, this is a very important step. Establishing a budget will allow you to see where our money is going and to identify superfluous expenses. You will also know how find ways to save money and reduce your expenses so you can save more.
To establish your budget, several methods exist: some use the good old paper/pencil and receipts and invoices. But for simplicity, we recommend that you turn to your bank’s application or Bankin and Linxo type applications. They will already give you a good overview of your expenses. You can also create a table in Excel with very simple formulas to create your budget and your savings plan.
3. Set a savings goal
Now you know how much money you have left after paying all fixed expenses. You can now set a savings goal. There really isn’t a set rule, but experts recommend spend at least 10% of your income (if possible) to build up precautionary savings. If you can afford more, go for it.
The recommended amount for precautionary savings is usually three to six months of income, but it may vary depending on your personal situation. The goal should be realistic and achievable, but ambitious enough to motivate you to save. Once the goal is reached, you can consider other types of savings, to invest in real estate for example.
4. Choose a suitable savings account (returns vs risks)
It is important to choose a suitable savings account for your precautionary savings. For this type of savings, it is important to choose an account that makes it easy to withdraw money when needed, without fees or penalties.
Also compare the interest rates of different savings accounts before choosing an account. Interest rates can vary widely from account to account, and choosing an account with a higher interest rate can help you accumulate our savings faster. For example, the Livret d’Epargne Populaire has an interest rate of 6.1% at the time of writing. The booklet A is barely 3%. If you are eligible for LEP (low income), favor this savings instead.
5. Save regularly
This is a golden rule for building up savings. It is better to save less but regularly. Hence the importance of setting a realistic objective at the start.
It is therefore recommended to put some money aside each month, even if it is only a small amount. You set an amount to save each month, which will be automatically deducted from our current account. Over time, you will adapt your consumption and your pace of life to your income cut off from this savings.
6. Keep your precautionary savings separate from your other accounts
It’s important to keep your precautionary savings separate from your other accounts to avoid spending that money on something else. It’s psychological: if you see that you have cash, you will be more tempted by superfluous expenses.
Open a savings account dedicated to your precautionary savings and regularly transfer money there. It will also allow you to easily view your precautionary savings.
7. Avoid unnecessary expenses
In a world of ultra-consumption, everything can become temptation. This is even more true with the marketing efforts made by brands. To avoid unnecessary expenses, clearly identify your needs. Before cracking, ask yourself a few questions: do I need it? Can I do without it? Is it a whim? I prefer to buy this object or this service or add these euros to my holiday envelope?
You can also look for ways to save money, such as comparing prices before buying something or using discount coupons. You can also take stock of your subscriptions, a mode of consumption that has exploded in recent years. You know that gym membership you pay for when you’ve only been there once? Or the Netflix subscription you keep paying for even though you haven’t watched your TV for 2 months.
8. Save excess money
In addition to saving regularly, it is also important to set aside excess cash. If your income allows it, you can end up with a surplus in your checking account each month. You may have spent less, received a bonus, an envelope for your birthday, an overpayment of taxes (yes it happens).
Do not hesitate to top up your savings account with this surplus money, for all or part, according to your desires. This will allow you to build up your savings faster.
9. Reassess your precautionary savings regularly
It’s important to reassess your precautionary savings regularly to make sure you have enough money set aside to cover unexpected expenses. If your personal circumstances have changed, you may need to build up more savings or reduce your savings.
You can also adjust your savings goal based on your personal situation and your long-term goals. Reassessing your precautionary savings regularly will help ensure that you are well prepared for life’s unexpected events.
10. Start as soon as possible
Last but not least advice: save as early as possible. As soon as you start making money, put some of your money into savings. The more time you have to accumulate your precautionary savings, the better.
Again, don’t think too big. This is the principle of the piggy bank for children. You can start by saving a small amount each month and gradually increase your savings over time, your income, your cash inflows etc.
Starting to save early and regularly will allow you to build strong precautionary savings for the long term. And to turn more quickly to other types of investments such as stock savings plans, cryptocurrencies, retirement savings plans or investment in real estate for example.
So much for our 10 monthly savings tips. If you have any other tips, feel free to share them in the comments.
