Consciousness on Your Savings Ratio

(1st of 3 parts)

See link for 2nd part: https://www.wei2success.com/grow-your-savings-ratio-2-of-3/

See link for 3rd part: https://www.wei2success.com/living-on-a-budget3-of-3/

How much of your income each year goes to your savings portfolio? Average people either spend more than their income or spend all their income. All aspire to have more abundant and prosperous life in the future but few ever realize or track what it takes to be one.

Are you one of those who long for a life free of worries from financial concerns? Here is one valuable secret. Be conscious of your savings ratio.

First, let me elaborate what is savings ratio by citing what it is not. It is not setting aside $100 a month to buy the latest Android for Christmas. It is not saving for the next sale at the mall. It is not putting coins at your piggy bank for the purpose of travelling to your next destination in Asia.

Let me share with you the story of Rina and Lito.

Rina was a full-time home maker.

Being one income family, she was conscious of their Savings Ratio.

Every month, religiously with a salary of her husband, an educator in the university, she would set aside an amount for their long-term savings.

By the time her son was in middle school she started earning herself from her part-time work. This would have meant that they could spend more. Probably, move to a better home, or buy a newer car, or travel more. But instead, she increased her savings ratio.

Slowly, their savings grew. She stopped working for awhile to get a graduate degree. She graduated top of her class. After her studies, an opportunity opened up to put up a tutorial center, something that is close to her heart. Now, she can bring her love for Math to more and more kids.

Now, she and her partners got 3 branches and they are on to their 4th and 5th.

Had she not saved for long-term growth, when the opportunity would arise, she won’t have capital to put in the business.

What is Savings Ratio (SR) then? Savings Ratio is the fix part of your income you set aside from your income every month to grow your capital. Yes, capital. This is your money that is set-aside to grow whether you are a capitalist or not, whether you have an existing business or not, whether you are just poor or plain poor. This is the money, which you set aside deliberately to grow and grow some more. This is your money at work for you.

If you are earning $300 a month, it is setting aside $30 for a savings ratio of 10%. If you are earning $1,000 and you decide to save up $200 every month that is a savings ratio of 20% per month.

Savings Ratio is the amount you set aside for capital appreciation divided by the net amount you earn every month.

SAVINGS RATIO = AMOUNT YOU SET ASIDE FOR CAPITAL APPRECIATION

NET AMOUNT YOU EARN PER MONTH

Your savings ratio is what you will grow over time. It will be your money working for you. It will not be for any big consumption. Neither it should be for a big ticket item like a dream house, a dream car, or a dream trip. It is specifically funds to generate funds for you. It is your capital that would generate for you additional income. IT is your MMM, your Money Making Machine.

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