It is important to learn what our savings capacity is and how to calculate it. This will lead us to substantially improve our way of saving.
By saving capacity we will understand those options that we have to separate part of our income and save them for future use. This would be the basic definition from which we are going to start.
The saving capacity is given by very different factors, so it is difficult to establish a single pattern in which we are all reflected. However, there are some key elements that we should always be clear about.
Saving means spending less than we earn . This, which seems superfluous for the obvious, is not so much. One of the main problems when it comes to calculating savings is that we are not able to calculate the expense, or, worse still, we move in an uncontrolled expense.
Being able to set aside money and that our balance of expenses and income is positive is to launch our saving capacity. Once this is underway, it does not matter if we decide to save on retirement plans or that we look for other tools to put our money to work. The important thing is that we will have acquired the habit of saving.
Can you calculate the saving capacity?
We said before that it is difficult to establish a single pattern in the calculation of savings capacity. In fact, the question we should all ask ourselves is how much money am I able to save? Instead of trying to find formulas that tell us what we can or cannot do.
What we can assess are the factors that will influence your ability to save. These factors are decisive as we will see a little later. Think that the long term will work for you with your money so it is convenient to determine as soon as possible what you will really need.
From here, it is true that we can resort to formulas that help us determine what we need. For example, there are those who assure that, as a minimum, we should set aside 10% of our income and allocate it to savings . If we are not able to set aside that 10%, we have no capacity to save. It can also be an indication that we are probably not managing our money correctly.
Factors that influence saving capacity
There is no single factor that influences your ability to save, much less. However, if there is a determining element, primary; your income level and its relation to your expenses.
It is a fact that in those domestic economies in which income and expenses are controlled through a budget, it is much easier to increase savings capacity and save. Therefore, the relationship between income and expenses is a primary factor that will influence your ability to save .
Another very important element is the level of indebtedness that you have achieved. Here we must include the different borrowing scenarios. Even the positive indebtedness that can be the acquisition of your home. If monthly, current and living expenses aside, your level of indebtedness occupies a very high percentage of your income, obviously the savings capacity will decrease significantly.