The expert shared tips on creating a financial cushion.
Regular savings, even with a small income, help to form a financial safety cushion and gradually create personal capital. To do this, it is important to set aside part of the salary immediately after receiving it, take into account mandatory expenses and choose savings tools depending on financial goals. Evgenia Veselova, an expert at the financial marketplace Compare, told Izvestia about this on the International Savings Day, which is celebrated on October 31.
How to start saving with a small income
According to the expert, the success of capital accumulation depends not so much on the initial amount as on regularity and a systematic approach. Even with a modest salary and significant rental expenses, you can gradually build savings if you set priorities correctly and control the budget.
As a first step, Veselova recommends determining a comfortable share of income for savings — from 10 to 20% — and transferring this money to a piggy bank immediately after receiving a salary.
"Saving small amounts also makes sense. For example, if you add 5,000 rubles to your savings every month, you can collect 60,000 rubles per year, excluding interest. If you place funds in a savings account or deposit, the income from accrued interest will be added to them. Regular replenishment of savings helps not only to increase capital, but also to prepare for unforeseen expenses, reducing the financial burden in difficult situations," the expert noted.
What should be the financial safety cushion
Veselova called the reserve in case of loss of income or unplanned expenses the basis of financial stability. Its size should be calculated based on mandatory monthly expenses. These include rental housing, utility bills, groceries, medicines, transportation, communications, and loan payments. Expenses for entertainment, travel, and the purchase of expensive gadgets should not be included in this calculation. For such purposes, it is better to form separate savings.
According to Veselova, people with stable employment should focus on a financial cushion of three months of mandatory expenses. Freelancers, professionals with unstable incomes and borrowers with existing loans are advised to provide a reserve for six months.
The expert suggests using several tools to store such funds. It is advisable to keep some of the money in a savings account, from where it can be quickly withdrawn if necessary. The other part can be placed on short-term deposits for a period of three to six months in order to receive interest income.
Why it's important to start saving as early as possible
For young people, time is becoming one of the main advantages in capital formation. The earlier a person starts saving money regularly, the more opportunities he has to accumulate a significant amount and receive additional income from the placement of funds.
In particular, when capitalizing interest, income can be accrued not only on the initial amount, but also on previously received interest. This mechanism is called compound interest. Its effect depends on the amount of contributions, the accumulation period, profitability and conditions of a particular financial instrument.
"For the gradual formation of savings, additional tools can be used: automatic rounding of expenses when paying for purchases, regular transfers to a separate account and savings for specific purposes. Such mechanisms help to develop a financial habit even for those who find it difficult to save money on their own every month," the expert explained.
As a result, a systematic approach to budget management allows you to gradually create a reserve for unforeseen situations and accumulate funds for future plans. At the same time, the size of the start-up capital is not a determining factor: the regularity of replenishment, realistic goals and the choice of suitable savings tools are much more important.
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