Your bank does not care about you. Your financial advisor does not give a monkeys about how much you will have in your retirement. And neither of these "experts" actually know very much about the right investments for you.
Ask yourself - if any of these so-called investment "experts" really had the super skills they market, why would they be bothering to advise you?
Investment organisations, banks and even governments deliberately try to make things complicated. Because if something is complicated and you don't understand, then you'll stop asking questions about it. And investing and saving is not complicated, particularly if you follow a minimalist ethos.
Now I'm not a financial advisor, or expert - God-forbid. So don't take any of what's coming as gospel, it's only a system that has worked for me. Your mileage may vary and this post is not investment advice ok?
Now that we've settled that. Here's what I do.
- Take my earnings.
- Pay myself first and take 10% to put into a savings account
- Take another 10% if needed to pay off any debts (although I carry no debt now, except a mortgage) This is one of the ways I became debt-free
- Take another 10% and give it away. To charity, friends in need etc
- Take a final 10% and play with it. This is my fun money, to not feel guilty about.
- The remaining 60% if you have debts, or 70% if you are debt-free is what I live on.
If 60% is not enough for you, then you need to reduce your outgoings as soon as you can. And do this as a matter of urgency, as you should not be living as close to your earnings as you are.
With the savings 'pot', firstly build up an emergency fund of 2-3 months salary. That way you'll not be so worried if the fridge breaks down, or you need to change jobs. Believe me, there is nothing so satisfying as having cash in the bank when you decide to finish with an employer.
Once you've built up your emergency fund, then find somewhere to put your savings. And no, I'm not going to tell you where to put them, and I don't thnk you need your bank or financial advisor to do so ether. Just spend a little time working out what's best for you.
That's it. There is no more you need to know. Where people fail is in not saving in the first place. If you do so regularly and interest rates go down, it doesn't really matter in the grand scheme of things.
If you want some further reading, then I'd recommend you read the classic "The Richest Man in Babylon" as a basic primer and then for more specific tips "The Motley Fool" (These links are affiliate links which will help support the blog)
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