The Rule of 72 tells you how many years you need to double your savings. To take advantage and get the most out of your savings, you’ll want to get in the habit of keeping 10% of your income as savings. For many people, this is difficult because we’re already living outside our means. If you can’t reasonably save 10% of your income, take a good, hard look at where your money goes for a period of three months by writing down what you spend or pay to the penny. Eliminate unnecessary spending and bad financial habits so that you are able to save 10% of your income in a savings account.

The Rule of 72 then says to divide 72 by the interest rate your savings receives to find the number of years needed to double your money. A low-interest savings account of 2% will take about 35 years to double (assuming the interest is compounded annually). Savings earning an 8% return will double at about 9 years. You can learn more formulas when taking a forex course.

When looking at your debts, you can use the “20-10” rule. Limit your total debt (excluding your mortgage) to less than 20% of your net annual income, and you’ll be able to use 10% or less of your net monthly income toward paying back debts.

If you earn $54,000 a year, you want to keep your debt under $10,800. ($54,000 x 20% = $10,800).

Your total monthly debt repayments (again, not counting your mortgage) should not be more than 10% of your net monthly pay.

If you earn $54,000 a year, you earn $4,500 a month. Your monthly debt repayments should be $450 or less. ($54,000 / 12 = $4,500 and $4,500 x 10% = $450).

Learning how to save and borrow money wisely are the basic building blocks for having financial security. Here are some tips to help you get there:

Live Within Your Means

All financial experts will tell you not to spend more than you can afford. Even people who claim they can’t save any money each month because they’re already using every last dime to pay just the basic necessities probably could trim down their expenses somewhat. If you keep a financial journal for three months and religiously record every last purchase and all the income coming in – you will be able to see where there is money being spent that is not necessary.

Create a Budget

Once you have a better understanding of your income and expenses, you can create a budget. Figure out how much is used to pay expenses and debts, and how much will be saved each month, and how much you have for miscellaneous spending and try to follow it as closely as possible.

Plan Ahead for Additional Spending and Costs

There is no point saving money if you can never use it! Plan ahead for events like vacations and unexpected expenses. When you plan in advance, you can keep your costs low by shopping around for the best deals and not just spending money spontaneously.