We always hear how important it is to save money. Saving means foresight, stability, and ability to face unforeseen events. Saving is essential to have healthy personal finances. Therefore today we will talk about savings; their importance and we will give you some tricks to save smart, making your savings more effective and enjoyable.

We constantly hear people say they can’t save. The truth is, even people who have low incomes should save. We know that there are people below the poverty line who can’t really do it, and yet these people should try.

This is because the more precarious my situation, the more forecasts I should take. However, this is not easy and therefore today we will tell you the tricks to save despite the circumstances.

What does it mean to save money?

Saving is the action of keeping and accumulating money, which implies that our income is higher than our expenses. The savings allow us to:

• Make large purchases that we cannot make with our immediate income.
• Cover unforeseen expenses such as expenses of illnesses, accidents, among others.
• Have a fund for emergencies or for cases where our income stops (serious illness, dismissal from work, among others).

Saving in order is to set aside part of the money that enters us to make a later expense. We save because:

• The expense we want to make cannot be done at present because we do not have enough money.
• The money is intended for expenses that we have not planned.
• We do not want to depend on our regular income for all expenses.
• We want to create a fund to sustain our expenses while we do not work.

With this in mind let’s discover how we can save if we do not have enough money.

How to save if I don’t have enough money?

To save, our income must be greater than our expenses. If we do not have enough money to save we must evaluate the options we have to act on our income and expenses.

In our income we can increase them by resorting to one of the following alternatives:

• Look for additional income options, such as a second job or piecework.
• Request a salary increase at my workplace.
• Find another job in which the salary is better.

In our expenses we can choose to reduce them, either by completely eliminating some expenses or reducing their frequency. We talked about this topic at length in the video about ant expenses. However, the main tips are:

• Evaluate which are the expendable expenses (vices, luxuries, entertainment and comfort)
• Establish which expenses can be made less frequently or reduce their amount (vices and ant expenses).
• Change our behavior patterns by choosing less onerous alternatives.

The only way to balance our personal finances and manage to save is to analyze our income and expenses. To get our finances back on track you can watch our videos on 7 steps to achieve financial freedom (Video in Spanish to which we can enable the English subtitles automatically translated).

We talk about save smart because there are ways to save in which our savings can lose their value… Find out below.

Are there the wrong ways to save?

If we save in a currency or an instrument that does not maintain the value of our money, we will end up losing part of our savings.

We must choose the means of saving that maintain the value of money. Some people have saved in cryptocurrencies, and to date they have lost part of their savings. Although crypto assets gained a lot of value at the beginning, they were volatile assets and not recommended to save.

Other people have kept their money in savings accounts denominated in currencies that have high levels of devaluation and inflation. This causes money to lose value.

Even more so if the amount we save is equivalent to the loss of the value of the accumulated money we will not be making any savings. We will look at this in more detail later.

The important thing is that saving means saving money and safeguarding its value. That is why sometimes saving involves investing or managing savings instruments such as gold, jewelry, stocks, among others. Next, we will see some tips in this regard.

Tips for save smart

Saving requires that the value of the money we keep is maintained over time. Saving with a currency in constant devaluation or inflation is a mistake that can be made frequently. The solution to this point is to seek to save in a hard currency or look for ways to buy goods that can be tradable and retain their value.

Some people choose to save in a hard currency like the dollar or euros. Other people look for products they can buy to sell and make a profit. This gain can be part of our savings and compensate for devaluation and inflation.

To save we must consider the following points:

• Look for an instrument (currency, commodity or physical or financial product) that is stable and allows above all to preserve the value of money. This point seeks to accumulate value rather than make it grow. At the point of growing the value is made in the investment process which is a step after saving.
• It must be a stable instrument that minimizes risk and therefore we will see that its profitability will be relatively low.
• We must evaluate that the amount we save is always greater than the relative loss of the value of the saved. This is because when savings have accumulated, there may come a time when the amount of money we add to what we save is less than the loss of value due to inflation or devaluation.

Next, we will explain this point better.

Savings and the loss of the value of the accumulated.

The idea of saving is to increase the fund that serves us to face future expenses. With this in mind, we must say that the idea is that savings always grow.

As our savings grow, inflation and devaluation will affect its value. If this loss of value is greater than what we can add period by period, we will have to reconsider our alternatives. Let’s look at the following example based on current US inflation:

• Inflation of 7.7%
• A savings capacity of $ 100 per month. Annually we can add to our savings fund $ 1,200
• Consolidated savings of $16,000

Our consolidated savings will lose value for an equivalent of 1,232 dollars annually due to inflation (7.7%)

Anyone who can only add $100 a month to their $16,000 savings fund can no longer grow their savings, they’re just making up for losses. The next step on your journey to financial freedom will be to invest that money to try to earn more than inflation.

Save Smart, another step towards financial freedom

Save Smart will naturally lead us towards investment. Accumulating money without receiving a return for this money tends to make you lose your purchase value. If we want to ensure our retirement or achieve our financial freedom, we will have to save and when the time comes to preserve its value through investment.

In future videos we will give you some tips to diagnose your personal finances and improve them.

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