What to do with the money you have saved?

Saving has become a priority concept and with which you should familiarize yourself from now on, as indicated by most of the experts in recent times. Thinking in the long term seems fundamental so that you can guarantee your solvency by thinking about adverse moments in your family finances or your future retirement. Have you considered what to do with the money you have saved?

Ideally, you can get the most out of that hard-earned money. Whether you want to prevent or because you are saving to achieve a specific goal, once you have a meager amount of money saved you may wonder now, what to do with the money?

Here we give you some ideas.

You have to be aware that unforeseen events may arise in your life that you cannot control. It is clear that if you have money saved, it is best to invest it. But, having a fund with which you can cover 3 to 6 months of your expenses would be very convenient, if not essential. Well, you may not need money right now, but remember that anything can happen.

This is the so-called emergency fund: if an unforeseen event arises, such as losing your job, suffering an illness, or an accident … with this reserved money you will be able to ignore the financial aspect and focus on the unforeseen event in question. For this reason, it is advisable to allocate a small part of your income to this savings fund.

Once you have this mattress, it would be recommended that you pay the debts you have, if you have them. In this way, you will avoid paying interest on your loans, cards, mortgages.

Leaving this option aside, you have three main possible ways to use your saved money:

Store it

Basically, it is about keeping it saved, and without touching it, keep saving it for the future. But you must know that having the money stored causes it to lose value due to inflation. Sometimes you may not see it, but fiat money depreciates as the costs of products or services rise.

You can clearly see this nowadays with gasoline prices, for example.

Spend it

The more money is stopped, the less the economy is activated. So, another option is to spend it. You can take that trip you always wanted, buy the car of your dreams or simply give yourself or your family some pleasures.

Remember that if you use the money, you need to make sure that you won’t need it in the near future.

Invest it

The last option is to try to get a return with your money by making investments. There are different ways to achieve this, such as:

Bank deposits

One of the options is to invest in bank deposits. This is lending money to the bank for a certain period, and that it returns it to you with interest. You can do it through checking accounts, funds, savings accounts, time deposits.

It is a very conservative way to earn money since the bank pays a fixed interest rate with very low risk. The problem is that right now, these interests are close to 0%, so it does not compensate.

Investment in fixed income

This option tries to invest in debt issues issued by a state or by companies. The return that you are going to get is not much, but it is an investment with low risk.

Invest in stocks or cryptocurrencies

There is a possibility of buying stocks or digital currencies that could increase in value over time. It is an option that has great risk since you need to analyze many statistics and be strategic to be able to predict changes and not lose money.

If you decide on this path, first rely on investment professionals.

Investment funds

It is possibly the best option on what to do with the money saved. It still has a certain risk, but it is the most balanced in terms of the profitability and risk ratio.

It is a money exchange, where investors deposit an amount, and a professional is dedicated to deciding where to invest it. So we have a person who is dedicated to seeking opportunities around the world and controlling our money: a professional with knowledge.

The key to getting the most out of your money is to rely on investment professionals, who can guide you on where to invest your money. And always have an emergency fund on hand: sometimes the money invested cannot be recovered immediately.

According to finance specialist Kelly Smith, it is advisable to have at least “six months of salary saved.” In this way, if your current salary is $1,000, for example, you should already have $6,000 saved in your bank account when you have reached that age.

But if, for example, we focus on applying the Greene Formula, at age 30 you should already have saved, the equivalent of an annual salary. That is, if we put the previous example, we would be talking about $12,000 approximately.

So it all depends on your income and your expenses. But let’s say that at least you should have the equivalent of six months of salary. This will assure you that you can support yourself for at least 6 months without having a fixed income, or that you have the financial capacity to respond to any unforeseen health or accident.

According to Smith, a person should have this kind of goal at any age, and not just at 30. But if we manage to reach that, it will be easier for us to continue saving later.

Now, you are probably thinking that at 30 years old it is impossible to save so much money, and it is true. According to a study published by Time magazine, three-quarters of millennials in the United States do not have more than $1,000 in their savings accounts.

Therefore, and to be a little more realistic, Smith returns to answer the question of how much money we should have saved at 30 and concedes that if it is not possible to accumulate six months of salary, we should try at least to have saved about a thousand dollars at the bank for emergencies that may arise.