Four Tips for Getting Started Saving During Times of Crisis

By Michelle Student-Holdstein

Bergisches Land. Even people who have little money at their disposal want to build up reserves – for small and large purchases, to support their children or for retirement. Especially in times of crisis, however, there is great concern that one’s own finances will not be sufficient to cover all fixed costs and the necessary living expenses.

“That’s why we recommend starting with a small component,” says Michelle Student-Holdstein, head of the consumer advice center in Wuppertal. “You can build up long-term savings with amounts starting at just 25 euros per month. The important thing is that you save at all.”

Also interesting: Is saving worth it again?

Step 1: List income and expenses

The first step should be to get a clear overview of your own budget. Is there possibly potential for savings? Maybe a membership that is no longer needed, a cell phone or energy contract that is too expensive, or insurance that is ultimately unnecessary?

This overview of every single expense is crucial for your own finances and should be maintained permanently. To keep track of things, some people find it helpful to pay primarily in cash. The income and expenses can be noted in a budget book, either on paper or with an app such as the interactive budget planner for young people “Budget+plus” from the consumer advice centers.

Step 2: Secure an emergency fund

Of course, the basic rules of investing also apply when saving small amounts: First, the current account should be in the black, consumer loans repaid and an emergency fund built up. Only money that is not needed in the long term should be invested. If possible, it is advisable to have a flexible reserve of around three net monthly salaries and to take into account the most important insurance policies, especially private liability insurance.

Step 3: Select investment form

Investing doesn’t have to be that complicated. If you get a detailed overview and have a monthly amount available, you have to set your own goals. What should you save for? For professional training next year, for the new car in a few years or for retirement planning in a few decades? Basically, the safer the investment, the lower the chance of a return.

And money invested for the long term is not available in the short term. You should therefore clarify in advance which goal is particularly important and choose the right products for the duration. The current account is the first address for the liquidity reserve. For medium-term investments of several months to a few years, fixed-term deposits and savings bonds can be an alternative.

If you have more than ten years, you can also think about stock funds – here too you can save small amounts on a regular basis. However, you should be able to leave this money lying around until the price has risen significantly.

Step 4: Grow money strategically

Some credit institutions now offer interest rates of more than three and sometimes even more than four percent for safe investments such as overnight money, fixed-term deposits or savings certificates. Because inflation remains high, this usually still means a real minus.

If you can invest your money for longer than ten years, stock ETFs could be an alternative. If you can ride out the sometimes strong fluctuations, you can achieve average returns of six or more percent per year. To do this, you have to be able to endure bad stock market phases without having to lose your money. Anyone who can do this will ideally be able to build up almost 25,000 euros in 30 years with a monthly savings rate of 25 euros with an average return of six percent.