alister_mcdonald
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The best idea is to draw up a budget. Sit down and record all of your monthly income and expenses. You need to ensure that you include bills, personal expenses, etc.
If you are like most of us, you will probably be spending more than you are earning and having ever-increasing debt.
If you haven't formed this bad habit yet, that's fantastic - don't. If you speak to anyone on the 'other side' of the money lending game, you will find that none of them use credit, just cash.
Once you have a complete list of income and expenses, you should then add savings effectively as an expense (the money will not be yours to spend for now). If your expenses exceed your income, you need to either earn more money or spend less.
How much you can 'afford' to save is entirely up to you. If you would prefer to have an actual figure calculated, then work out how much you would like to spend each year when you have retired and work back from there.
Eg: If you would like to spend $20,000 per year in retirement and you expect to live for 20 years, then you would need roughly $400,000 in savings (assuming no interest is earnt on that money).
If you are simply wanting to save for an object, then work out the cost and when you would like to buy. Work back from there again.
The best way to save is to have money taken straight out of your pay, bank account, whatever and put straight into your investment (best to start with a simple higher interest bank account).
My apologies if this is a basic answer, but it appears to be a basic question.
All the best with it,
Alister
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