Increasing Your Rate of Savings to Invest More

Increasing Your Rate of Savings to Invest More

If you are thinking of investing, but don’t know how to save money to invest, then today we are going to discuss using the money you are already putting aside as savings as capital to earn more.

The rate of your savings is the key when talking about earning interest on your savings. For the first ten years after you start to invest, the rate at which you save will have the biggest impact on your returns. You can overcome any bad investment decisions that you make at first if the amount you save is hefty enough. 

“Try to save something while your salary is small; it’s impossible to save after you begin to earn more.” – Jack Benny

Does that mean you need to worry if you can’t afford to save too much right now? I don’t think so. The important thing to pay attention to, at this stage of your investments, is whether you can increase your savings rate over time. There are a few ways to do that. 

You can dedicate at least half of your raises to saving up for investments, or increase the rate over the period of five to six years, once your income begins increasing. Increasing your savings rate by as little as 5% every year for a period of ten years will result in sizable returns on investments. 

The returns you get in the early stages of investments will not have much impact on the final result. In this stage, you can afford to make a few mistakes and still come out on top as long as your savings rate is maintained.

“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” – Robert Kiyosaki

Making small changes to increase the amount you save up requires a lot of meticulous planning. This is why I often suggest keeping a set time aside when you plan your finances. Being clear on what your financial goals are and understanding the incoming and outgoing money flow will help you create a tight budget.

You will learn to identify problem areas that you can work on and also find solutions to tackle those problem areas. This will give you a chance to save more by budgeting and running a tight ship with your expenses.

To save more, initially, you have to live far below your means so that you can maximize your savings rate and the part of your net income that you put toward your savings and investments.

Final Thoughts

People always will tell you that it takes money for you to make money. It is more or less the truth. When it comes to investments, the more money you can put toward it, the more chances you have of generating a great amount of passive income. The same is with businesses, the more you can put into its launch, the greater you have the odds of success. 

This being said, you cannot discount research, learnings, and your planning, but does play an important role. Learn to increase your rate of savings so that you can invest more.

Why You Need to Invest in an Emergency Fund Today

People consider their 30s to be the prime of their lives – it falls right in the middle of working hard to establish yourself and preparing for retirement. It’s the only decade of your life where you don’t have to think about what the future holds because you’ve already tied a bell around its neck. 

invest money

When you’re at this juncture of your life, it might be difficult to imagine why you might ever need an emergency fund. 

It is a misguided belief that emergency funds are only ever needed when you’re short on funds or when you’re preparing for a possible crisis. Not every “emergency” has to be a life-altering event from which you would never recover. More often than not, what constitutes an emergency might just be a wayward hospital bill. 


Although I do encourage all the readers to always be prepared for the most dramatic situations – I believe prevention is better than cure, sue me – it’s important to note that an emergency doesn’t always have to be a near-death event at all. Sometimes, an emergency can just be a sudden expenditure you couldn’t reasonably foresee. And it is precisely for this reason that you should invest in an emergency fund as soon as possible. 

Your emergency fund will help you to cope with and overcome any sudden financial blows you may face in life. The main goal of investing in an emergency fund is to safeguard yourself against debt. 

Every one of us is bound to face some unfortunate life events that will leave us devastated and in tears. Dealing with emergencies like this is the primary need for an emergency fund:

  • An unexpected medical emergency in the family,
  • Death of a loved one leading to funeral expenses,
  • Losing a job or livelihood,
  • Crisis in the family, among other things. 

Big, life-changing events like these already come with their own set of consequences. If you’re unprepared to bear the cost of events like these, it may become twice as traumatizing and not just for you but for your loved ones as well. 

Going into debt as a result of paying for a dear one’s cancer treatment can have disastrous effects on your family life, your health, and the well being of your entire family. 

However, there might also be some smaller but equally unexpected events that can be assuaged with an emergency fund: 

  • Pet-related medical expenses,
  • Moving from one state to another on short notice,
  • Car troubles,
  • Losing disposable income, among other things. 

If you try to face situations like these with no preparation or planning, they will add to your debt. 

While these incidents might not be major enough to tip your life into total disarray, they can affect your finances badly enough that you might have to cut down on certain expenses you were able to easily afford before. This could lead to a shift in lifestyle, and such changes can be quite hard to adjust to, especially if you have children in your family. 

If you’re wondering whether to start investing in that emergency fund now or two years later, my advice would be to start as soon as you can. Like I always say, it is never too early to plan a safe, secure, and hassle-free future.