Three stages of creating a financial cushion

The financial cushion is an untouchable money stock that will help you in times of instability or become your first investment capital. If you don't have any savings yet, you should consider creating a money stock. This process is not so complicated, but it requires certain discipline and planning skills thanks to which abstract expenditure cuts will turn into a clear goal.

The process of shaping a money stock can be divided into three stages.

1. Determine the goal and timing of savings

Decide how much money you want to save and over what period of time. Then divide this value by the 12 months remaining before the goal, and you will find out how much money you need to save each month.

2. Open a savings account

Most likely, you will not be able to simply put cash into an envelope: first, you will definitely want to take some amount from it, and secondly, your money will gradually become devalued due to inflation. It is better to open a long-term deposit account with the possibility of monthly replenishment and early withdrawal without losing the interest: this type of deposit accounts has a reduced interest rate, but you can withdraw money any time. The deposit interest rate will at least partially protect your savings from inflation. The alternative is a currency deposit account. In this case, you will have to buy currency every month to replenish your account, but it will be easier to avoid impulse expenditures, which means that you will get closer to the goal.

3. Save some money from each cash inflow

Having made a savings plan, follow it strictly. Transfer money to a deposit account after each cash inflow or set up autopay in your mobile banking app. Try to put money into your "piggy bank" using your irregular income too: bonuses, cash awards and gifts to discipline yourself and quickly collect the necessary amount.

In the process of achieving your financial goal, study the available ways to save and increase your capital. If you want to create a stable source of passive income, consider investing in a promising area of technology. For example, in the project "Duyunov's motors" whose funding is organized by the international crowdinvesting company SOLARGROUP. Learn more about this opportunity on the solar.group website.