From there, start with small goals and slowly add a portion of your income per month to your stash until you get to complete it.
Once you reach the recommended amount for your emergency fund, what do you do? Keep it somewhere safe, do not invest it, it has to be readily available in case something happens. But it also has to be not too accessible that you’ll be tempted to tap into it every now and then.
Once you have secured it, here are the next things that you can consider saving for.
This is not to be confused with your emergency fund. This is for those that can be prepared for. Examples are car repair costs, Christmas gift shopping for the whole family, yearly family reunion, house repair costs. This is where you can tap into in case something gets broken which is not considered as an emergency.
Once you have both your emergency fund and spending fund secure, it is time to save up for your children’s education. You can buy insurance packages for this or you can just save up normally. Whichever you choose, as long as the goal remains intact, you should be fine.
After securing your children’s future, it’s time to think about your future. Start saving up for your retirement. You can allocate about 15% or so of your income to your retirement. You can also opt to save 10% and then start investing the 5%.
Start growing your wealth
While saving up for your retirement fund, you can start investing in long-term options. This is better compared to having changes every now and then. You’ll eventually lose more money that way.