The formula of financial welfare is simple: a household’s total income should exceed expenses. The difference creates savings that is the very cornerstone of a household’s financial health. It also reduces dependency on the primary source of income. If a household has this safety cushion, it is able to overcome situations where their income has reduced or unexpected costs are incurred. By accumulating savings we also ensure our financial freedom, for we are able to allocate a part of our savings to achieve specific objectives without having to resort to incurring liabilities in the future. How to start? The Swedbank Institute of Private Finances has compiled 10 useful tips.

10 tips on how to create savings Read more. »

Estimate the desirable amount of savings that would satisfy your short-term and long-term needs. Start with planning your budget, in order to see how much money you can afford to set aside for savings.

Explore the possibilities to apply for an automated transfer of certain amount into your savings account on regular basis. Such features are offered by most of the internet banking services.

Do not limit yourself to simply setting aside whatever money has left over by the end of the month. Treat the savings as bonuses you are awarding to yourself. You could start each month by paying yourself a bonus. You might even make an additional column “My bonus” in your monthly budget table and pay it right away after receiving your salary.

Supplement your savings with additional income, such as bonuses, donations, extra fees etc.

Fill out the Annual income declaration, submit it to the SRS and receive the entitled amount of tax returns. Set aside the received money to accumulate additional savings.

If you have a loan with a variable interest rate and the monthly repayments gradually become smaller, set the difference aside in order to accumulate savings. Thus you avoid wasting the surplus money.

Set aside savings for special purposes, such as wedding, childbirth, education and holidays. Start to accumulate the savings in good time. A clear link between the savings and the intended purpose is a great motivator.

Please note that every amount you save is relevant, even one lat a day (it’s 365 lats a year!).

Setting clear targets is essential if you want to accumulate savings. You should define the desirable amount, the term and the purpose. “Whenever I find a two-lat coin in my wallet, I put it in the piggy bank. My aim is to save for a camera and take pictures of my journeys. By now I have saved 100 lats.” (Dināra)