Three ways to figure out how much of your salary you need to save

Three ways to figure out how much of your salary you need to save
Saving money is a standard practice for many South Africans trying to circumvent the rising cost of living and beat rising inflation and interest rates.
Knowing how much you need to put aside each month for saving can, however, be confusing.
Sebastian Alexanderson, founder and debt counsellor at National Debt Advisors says that saving money is a very important part of any healthy personal finance management strategy.
To work out how much your salary you need to put towards your savings, consider one of these three savings methods:
70/20/10
With this budgeting method, you need to separate your salary into three groups where:
– 70 percent of your income goes to living expenses.
– 20 percent to debt payments.
– 10 percent to savings.
80/20
Another budgeting method is the 80/20 method, where you separate your salary into two separate groups. People need to separate:
– 80 percent of your income for needs, wants and debts
– 20 percent is strictly allocated for savings.
50/30/20
Like the 70/20/10 method, you need to divide your salary into three categories. With this method, you can put away
– 50 percent of your salary to needs like rent, groceries, and utilities.
– 30 percent to wants such as hobbies, holidays, and eating out.
– 20 percent to your savings.
Once you have decided how you want to split your salary, you can then consider these very different ways to use your savings:
Emergency fund
Having some money set aside in an emergency fund for unexpected situations will leave you in a better position than if you had to borrow cash when you need it and go into debt.
Tyrone Lowther, head of Budget Insurance, recommends that you have three to six months’ worth of expenses saved up in your emergency fund.
“Start by saving a small amount each month. Commit – don’t withdraw anything from this fund unless it’s a crisis.”
Savings fund
Start your savings fund by having a goal in mind. You can choose to have a long-term savings goal, a short-term savings goal, or both.
An example of a long-term savings goal is a down payment on a house or a car, while a short-term savings goal could be a holiday for your birthday or new furniture for your home.
Having a goal in mind will keep you motivated to put some money away every month until you reach your savings goal.