5 reasons to save 10% of everything you earn

Many people spend the money they earn… to buy things they don’t want… to impress people they don’t like (Will Rogers).

Hello friends!

As I have already mentioned in other texts here on our website, I have a deep interest in the area of ​​administration and economics. I even started a degree in public administration (I interrupted because it was difficult to reconcile with the master’s degree) and I often think about doing economics.

Well, there is no denying the importance of money, because the economic relations between people and companies are linked to its exchange. And it is interesting what Lair Ribeiro mentions in one of his videos: a financial problem is not solved with money, because if the mentality and behavior do not change, it will not be the money that will.

For example, a person who has the habit of spending more than he earns, taking the money from the overdraft or credit card, if he does not change his way of understanding the financial use he makes and his behavior, he will just be sinking more in debt if you have the opportunity to earn more. Thus, if you earn one salary and spend one and a half salaries, you will have a debt of half a salary and, if you start earning ten salaries and spending fifteen, you will have a debt of five salaries per month. That is, it is not more money that solves, but the change in ideas and actions.

And, of course, we always have to remember that in order to have more money, we have to know how to balance two variables:

– what is gained;

– what is spent.

For a company or a family or a country, it is also like this: the gain has to be greater than the expense so that there is financial security in the long term. And, for there to be a positive difference, we can change any of the variables, increasing the monthly profit or decreasing the expense.

One of the most effective ways ever invented by mankind was the habit of saving 10% of everything you earn. 10% might not seem like much. If the salary is 788 reais today, 10% is 78 reais. So, some people think: “78 reais saved will not make me richer… and, therefore, it makes no sense to do this saving”.

But, we have to think with a more open vision. In 10 months, if 10% is saved, the person will have 788 reais, that is, a salary and if they do it consistently for 10 years, they will have 9,360 reais! Which is equivalent to a year’s wages! That is, if the person wants to take a year’s vacation or if he needs to be on leave, he will have this amount available for him.

This is one of the reasons to learn to save at least 10% of your salary. But there are other equally beneficial reasons:

1) Learn to spend less

A common excuse is the following: “I already earn too little… how am I going to save 10%?” Well, as we have seen, 10% is a small amount and it is always possible to live on 90% of salary or income and save the rest. This is because it is a habit to spend more than you earn or spend everything you earn.

That is precisely why Lair Ribeiro can safely say that a person who is having financial problems will not improve their situation with more money. If you earn 788 reais per month or if you earn 7880 reais, it is your habit that will determine whether you will go into debt or if you will live on reserves and income.

2) Know about expenses

Continuing, a person who says he will not be able to live on 90% of his salary or income usually has no idea where his money will end up, that is, he does not do the minimum accounting and, therefore, has no idea what proportion will go for what.

Many people even spend an important part of their resources on fun and entertainment. There’s nothing wrong with wanting to have fun, but remember, we also have to think about the long term. What’s the use of spending it all on fun and then worrying and losing sleep over debts and interest?

3) Give value for money

The conflict between money and spirituality is a false conflict. A person who is charitable will be charitable with little money, but if he starts to earn more, he will be more charitable, that is, he will be better able to help more people. And a selfish person will be selfish earning little or much…

This third benefit means valuing money for what it is: a resource for achievement. As I mentioned before, when we start saving 10% of what we earn, we start to value money and that means that if we increase our income, we will take equally good care of what we earn.

And this is also a very common misconception of those who are going through trouble: thinking that when they earn more, that’s when it will be possible to take better care of the money that comes in. Now, if a person cannot take care of the little, how will he take care of the much?

Furthermore, as we see in the book The millionaire lives next door, those who accumulate more capital than they can spend in their lifetime have a pattern of savings that is consistent, that is, they spend much less than they could:

4) Security

When I talk to people about this subject of creating the habit of saving, I like to ask the following question: would you like to have an extra salary all year round in your account? Obviously everyone answers: yes! So, just save 10% a month and you’ll even have more than a salary…

The advantage of doing this is that it brings a feeling of security which is important. If something happens, if you need to take care of your health or there is an unforeseen event in the house or with the goods, it will be possible to pay for the solution – without having to resort to loans and going into debt. This brings an important sense of security, which tends to reduce worries and insomnia.

5) Opportunities

It’s funny that, if you have debts in your name and go to the bank to ask for money, if you’re lucky, you’ll get a loan, but with astronomical interest (at least in Brazil). But, if you have money saved, you will get a loan or financing – if you need it – with lower interest rates or you will be able to raise more funds more easily.

So, a person no savings today you will get 13% per month (or more!) when lending. while a person with savings You can get loans of up to 1%…

And what is the advantage? Well, opportunities always pop up here and there. Maybe a friend or family member makes you an offer to start a business or you can find a share or land at an unmissable price… in short, opportunities to earn more tend to appear more for those who have saved resources than for those who have nothing. or are in debt.

And let it be clear: sometimes, to start a new business, a new source of income, maybe it doesn’t take much…

Conclusion

And another important factor related to all the above is that, with money saved, it is possible to earn money without doing anything. It’s curious to think this way, but it’s true. It is possible to multiply what was gathered without doing anything at all… have you thought? Make money without having to work?

Well, that is only possible from the point where there is money to be invested. With certain financial applications, a person can double their assets in a few years. It is evident that it is necessary to research and study the applications that are most suitable for each profile, always in the logic of evaluating the proportion of what has profitability, liquidity and risk.

Questions, suggestions, comments, please write below!

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