Keep track of your ex­penses

Savings are important for achieving financial security and having the flexibility to meet unexpected expenses. We have compiled some good advice to keep in mind when it comes to saving.

Pay off expensive debts

The first step is to pay off expensive debts. Various short-term debts carry high interest rates that are burdensome in the long run. These debts include:

• Overdrafts

• Credit card installments

• Payment plans

• Small loans

Overview of expenses

Review your finances once a month and make a plan for the coming weeks. Distinguish between fixed costs and costs that you could have more control over. It can be useful to budget a certain amount for:

• Groceries

• Entertainment

• Savings

Many of us don't have an overview of all the subscriptions we're paying for, and many inexpensive subscriptions quickly add up to a large monthly amount. It's wise to cancel services you don't need to use.

Be critical of your expenses

Get used to critical thinking and ask yourself whether this spending is really necessary. Think carefully about the purchases you're about to make and consider whether there might be a more economical approach.

• Where is the cheapest gas?

• Can I buy this used?

• Is this necessary?

• Can I afford this?

Additionally, it can be beneficial to create a meal plan for the week and write down a shopping list before going to the store.

Create a budget

Once you have a good overview of your expenses, the next step is to create a budget. The budget doesn't need to be complicated, but it's important that it shows your expenses and income, making it easier for you to decide how much you want to set aside each month.

Set long-term and short-term goals

• It's fine to have more than one savings goal in progress simultaneously, and it can be fun to set smaller goals that are easier to achieve as they can serve as great motivation for other savings.

• Long-term goals are major investments like an apartment, travel to distant places, and other things that take longer than a year and a half to save for.

• Short-term goals are smaller amounts that take less than a year and a half to save for.

Regular savings

Plan a percentage of your salary at the beginning of each month to go directly into a savings account or sign up for a subscription in funds.

• Savings accounts are good for those who don't want to take much risk and want to know what interest the account will bear over time.

• Funds are suitable for those who want to take their first steps in investing. They have the advantage of consisting of many assets, but it's not possible to know in advance what the return on savings will be.

Savings goals can be different, so it's possible to choose different accounts or funds for long-term and short-term savings.

Different savings options

• For long-term savings, fixed-term accounts are suitable where the balance is locked for a specific period and cannot be used during that time. Such accounts often bear higher returns. Housing savings are an example of a fixed non-indexed account that could be an interesting option for those saving for real estate.

• For short-term savings and emergency funds for unexpected expenses, non-fixed accounts or accounts that are fixed for shorter periods are suitable. Green Growth is an example of a non-fixed savings account that supports a green future and the United Nations Sustainable Development Goals. Non-fixed accounts usually bear lower interest rates than those that lock in the amount for a specific time.

• It's possible to have different accounts for different types of savings. Various types of savings accounts are available at Arion, so everyone should find an account that suits them, whether indexed, non-indexed, fixed, or non-fixed. It's easy to compare and open savings accounts in online banking and apps, and it's recommended to sign up for regular savings where an amount is automatically transferred on a regular basis.

• If you want to take your first steps in investing, a subscription to funds might be something for you. Various funds are available, but it's good to keep in mind how long you plan to invest and how much fluctuation in returns you can tolerate. For example, you should form an opinion on whether you want to invest only in lower-risk assets like bonds or in higher-risk assets like stocks, or mix these different asset classes.

It's normal not to always achieve your goals when it comes to saving. It's good to keep in mind not to give up and to keep going. If you take two steps forward and one step back, you're still further along than if you hadn't taken any steps. Don't fear finances, but get a good overview of them and make them your hobby.