Savings: advice, accounts and a little philosophy.
Saving is no easy feat for households. Why do it and how do you choose the solution that suits you best?
What exactly is saving?
This is a significant part of your "wealth".
Mathematically, it is the balance that remains available after using your income to cover your expenses.
Based on this definition, it's not so much the level of income that matters but your ability to manage your expenses.
If we follow this logic, someone who earns twice as much as you is potentially less wealthy than you. It's an interesting perspective, isn't it?
It's not always easy to control your income level, especially if you're self-employed or entrepreneurial. However, you have a degree of control over your spending levels.
The choice of your accommodation, the choice of your vehicle - if you have one, the choice of your hobbies, your consumption... All of this is under your control.
Savings: a matter of personal values?
The ego, this need for recognition and validation, sometimes pushes us to spend more than necessary.
A premium car, a dream trip, the latest technological gadget, a luxury watch... so many purchases that are made not to satisfy our desires but above all to impress others.
We can't generalize of course, but let's face it, the way others look at us influences our choices.
The antidote cocktail to the ego? A dose of humility, a touch of courage and a taste of self-confidence.
After all, do you really need the latest gadget?
Do you really need this weekend in Paris?
Do you really need that umpteenth pair of sneakers?
You can treat yourself, but you don't need to spend more than you need.
All the more so since this famous recognition and the approval of others are only ephemeral or even futile.
That's all? Just be reasonable?
That would be too easy.
Studies show many influences that prevent us from saving.
First of all, the famous principle of "immediate gratification".
It's not a new concept, but social media, online shopping platforms, 24-hour delivery, and easy access to anything you can imagine has only made this trend worse.
No more waiting, no more patience, no more self-regulation... We need everything, right now and that's the least we can do. Pleasure first, reflection later.
Then, procrastination.
The malicious cousin of instant gratification.
"No need to save now, we'll do it later."
"Yes, I'm digging into my debt, but I'll settle it in due course."
"It's true that it's not a priority, but we have fun first and we'll solve the emergency later."
"In addition, I have my credit card. I don't really feel the expense. »
These psychological barriers prevent a sensible approach to money and our ability to save.
Okay, but in the end, what is the advantage of saving exactly? I'm fine without it!
Think of savings as your personal provider of "time" and "flexibility."
You are buying, in a way, a degree of freedom, a degree of independence.
An unforeseeable necessary expense? No stress, you can deal with it. You can even consider repaying a loan early with your savings.
A career change? You have the luxury of sitting down, thinking about it, preparing for the future.
Do you want to resume your studies?
Do you want to invest in a micro-enterprise?
Your savings level suddenly gives you a multitude of options.
This independence, the time and flexibility you have... are far more valuable than the series of impulse purchases you've become accustomed to.
Does saving at least pay off?
Let's be honest, you won't get rich tomorrow given the low interest rates that have been in place for many years.
This is logical, we cannot benefit from low rates on purchases and at the same time be well paid on our savings account.
Gone are the 5-6% you could earn over time. Negative rates were even applied recently.
However, there are variations in returns depending on the type of bank and additional solutions exist allowing you to aim for a greater return on your money.
Is that the only solution?
You can also opt for an investment savings account.
A portion of your funds will be allocated to an investment in the form of stocks, bonds, or a mix of both.
As much as a simple savings account is safe, the investment solution is riskier.
Generally, your money should be invested over at least two years, if not up to five years. This is to anticipate market fluctuations and thus assimilate possible losses.
Finally, you will obtain a profitable financial situation that would tend, based on the history of the last ten years, towards a return on investment varying from 4% to 6%.
Some banks offer promotions that allow you to make the investment without administrative fees.
There is indeed a remuneration for the financial institution during the course of your investment, but nothing that will impact your return on investment in a significant way.
How much should I try to save?
There are no rules, just trends and statistics.
In the end, who are you who assess your financial capacity, your projects, your needs.
To put it in context, here are some data:
A Swiss household saves an average of CHF 1,460 per month.
The German-speaking Swiss save much more than the French-speaking Swiss people. From 14% to 17% of revenues in Basel or Zurich compared to 10% - 11% in Geneva or Lausanne.
More surprisingly, young people are saving more. The older you get, the less you save. This trend is reversed from the age of 75.
Lately, having children is expensive. This is not a surprise. The single-parent household is particularly affected with less than 10% of savings compared to the income generated.
And now?
You only live once so follow your dreams, realize your projects, live life to the fullest...
Milenia is at your side to support you in your credit application process.
However, our mission is to make your life better.
In this spirit, savings are a good lever for freedom and over-indebtedness must be avoided at all costs.
Be perceptive in managing your expenses, invest your money by assessing the balance between risk and profitability and when you need a helping hand to make a personal project a reality, take the time to compare credit offers before committing, call us; we will advise you free of charge and in an efficient and personalized way.