Young professionals: saving without scrimping on the good things in life
A handbag from a premium luxury brand, a trip, a new car, investing in property, and coping with life’s curve balls... As a young professional, building up savings is something to seriously consider between guilty pleasures, leisure activities and more down-to-earth projects. Here are our tips for building up short-, medium- and long-term savings without frustration.
Good habits to balance your budget
Start by drawing up a detailed monthly budget. List your income and expenses to get a clear picture of your financial situation.
Save by adopting the 50/30/20 rule
Divide your net income as follows:
- 50% for basic needs (rent, food, bills)
- 30% for leisure and personal expenses
- 20% for savings and debt repayment
Automate your savings
Set up an automatic transfer to a savings account as soon as you receive your salary, and then forget that the money’s there 😉. If you tend to dip into your savings, opt for a locked-in savings account, which will often earn you more interest.
Set up an emergency savings fund
Aim to save at least €500, but ideally a financial safety net equivalent to 3 months' salary.
Zelda, your little Jack Russell , has swallowed something she shouldn't have. Ouch, unexpected vet bills that you haven't budgeted for this month.
It's important to have direct and easy access to your savings, so that you can cover any unexpected expense.
Cut back on unnecessary outgoings
Identify non-essential expenses and try to reduce them (unnecessary subscriptions, impulse buys).
If the shopping basket on your favourite fashion website is brimming over with those must-have items , wait at least 24 hours before confirming your order. Maybe you'll forget about it, realise that your wardrobe is already full to bursting, or that it's simply not reasonable - after all, you only recently had to replace the fridge when it gave up the ghost.
To avoid temptation, sort out your various newsletter subscriptions and don't hesitate to unsubscribe, so that you’re not lured by the promises of the next private sale.
What's the ideal amount of savings for your income?
Once you've deducted your current and regular expenses, such as rent, mortgage repayments, subscriptions, transport, insurance, food shopping, leisure and holidays, you can take this available amount and save all or part of it.
In short, you can put away the following amounts:
- If you earn between €1,500 and €2,000 a month, you can save 15%.
- If you earn between €2,000 and €3,000 a month, you can save 30% of your income.
- Finally, people earning more than €3,000 a month can save 35%.
Long-term savings: finance your projects, your future and take advantage of tax benefits
A number of banking and insurance products allow you to save for the long term, while benefiting from significant tax deductions.
Becoming a homeowner
Do you have your sights on buying property in the future, in the medium or long term? Opt for a home savings plan.
By signing up for a home savings plan, you can receive a loan on attractive terms to finance your own home, in exchange for the payment of contributions.
Under certain conditions, contributions paid into a home savings plan are tax-deductible as special expenses.
Preparing for and anticipating retirement
As soon as you start working, you can take out to a retirement savings product that entitles you to deduct up to €3,200 a year from your tax bill, while providing you with additional income in case of early retirement. With reforms being rolled out in every country of the European Union, preparing for retirement as early as possible is a wise choice.
Protecting yourself and your loved ones in the event of death
Financing a project, protecting your loved ones, preparing for retirement or passing on your assets are all good reasons to take out a life insurance policy.
The term "life insurance" is commonly used to refer to two different investment products.
- Death benefit
- Endowment savings and investments
If you're not sure whether to choose a Home Savings Plan or a life insurance policy, visit our blog to help you make the right choice in line with your needs.
The secret to saving? Set goals!
Finally, set short-, medium- and long-term savings targets to keep you motivated.
From this point on, determine your monthly savings capacity.
A number of mobile applications offer tools that make managing your budget and savings fun and efficient.
From now on, you'll have all the keys you need to control your budget and become a professional saver!
