How much of your income should you save?

Saving is an alien concept when you are in your 20s. Most young professionals would spend all their money on partying, expensive clothes and travels, living the “You only live once” motto. While this is one way to enjoy life, it is guaranteed not to last because in the long run, you will suffer from the rut of living on an endless string of debt and financial problems.

When people ask when they should start saving, we always answer one thing: save as early as you can.

When you are starting out with your business or your career, you may have little leeway in terms of your income. However, this is not an excuse for not saving. Commit to set aside a certain portion each month even if it is as little as 5% of your total income. Setting aside this amount is the first thing that you should do. Avoid the pitfall of spending first and saving what is left of your money. Make it a priority to segregate your savings fund first and adjusting your expenses afterwards.

As your income grows bigger, so should your savings fund. It is important that you monitor how your expenses grow as your income grows. Ideally, your expenses should not grow in exact proportion with your income because if this happens, you will still be stuck with your previous financial setup. Your savings however, should follow the same increasing curve, with the growth rate even higher in percentage. Most people would say that you should allocate 10% - 20% as your savings but if you can go higher, why not?

The beauty of saving will not be felt in your day-to-day living but it provides you with the security and peace of mind that you have set aside something for emergency situations and for your retirement. Don’t live today in splendor and the next day, in squalor. Manage your finances wisely and always remember to live within your means. While it is great to enjoy while you are young, remember that there is always tomorrow to take care of.

Sound financial management starts with budgeting and being able to set aside money for your savings. If, however, you are caught in a financial bind, you can augment this urgent need by borrowing money from payday loan companies like GoDay. GoDay aims to help people overcome a financial situation by offering hassle-free and transparent terms to customers. GoDay Payday Loans Toronto is also regulated by the Ontario Payday Loans Act and is a member of the Better Business Bureau.