Most people do not think about retirement provisions at a young age. But it is not difficult to put money aside even as a young professional – for example through a personal financial plan or stock portfolios. How to save or invest money effectively is simply explained. Parents should start saving for their children at baby age.
Surveys show that currently around 85 percent of 14- to 25-year-olds save around £140 a month. Mostly, however, savings are made on a specific occasion such as a driving licence or a trip. Only about 13 percent think about their retirement provisions when saving. Furthermore, the proportion of men saving for old age is 17 percent, which is significantly higher than that of women (nine percent).
If you want to save money, you need to be aware of your financial situation. Young graduates in particular have often accumulated debts through student loans. In order to be able to save effectively, experts advise to reduce debt completely. There are various instructions that can be followed. These are provided by the Federal Government, for example.
Reduce the cost of living
You do not have to earn a large salary to build up initial reserves. Instead, you can save small amounts every month. Norisbank provides some simple tips for this. First of all, it is important to start saving in the first place.
Saving starts with the cost of living. For the beginning, you should get an overview: How much money is spent each month on which items – and is it justified?
- Especially with energy costs, money can be saved quickly. For example, one should make sure to switch off electronic devices and the lights when leaving the room for a longer period of time. You can also replace light bulbs with more energy-efficient versions.
- As far as heating costs are concerned, it is worth checking the utility bill, because mistakes are often made here.
- Money can also be saved on leisure activities. The central question is always: Do I really need this? Of course, the pleasure should not be neglected. But paying monthly fees for the gym, for example, which you hardly ever use, makes little sense.
Finding the right investment
In times of low interest rates, a fixed investment is hardly worthwhile to save money in the long run. Which investment is the right one depends on several factors:
- First of all, there is the question of how much risk one wants to take and whether higher losses are acceptable. If this is not the case, one should rather focus on bonds. These offer regular profits without much risk.
- More efficient, on the other hand, are flexible investments such as shares. Although the money is not paid out on a specific date because of price fluctuations, higher profit margins are possible. Investors can either invest in specific companies or cover several sectors at once through funds.
- The advantage of funds is that you usually no longer need a manager to manage them. Instead, an electronic comparison is made to see whether there are any price changes. Any profits are then paid out or invested further.
In any case, savers should take enough time to inform themselves about investing. Then it is definitely a sensible method to save money in the medium to long term without major effort.