Consumption, savings and investment: plan and multiply

February 2026 by Mario Pires

Every month the story repeats itself: The salary goes into the account and a good portion of it already has a purpose. Housing, food, transportation, telecommunications, holidays… Consumption absorbs a significant portion of our income, and that's natural. This is how we meet our basic needs and maintain our quality of life.

The question that arises is "And what about the future?" How are we going to buy that house with more space for the family or secure an emergency fund and extra money for renovations? These are goals that require planning, time, and discipline. This is where saving and investing come in.

Consumption: necessary, but conscious

Consumption is the immediate use of available income to satisfy needs and wants. It's not a bad thing, but several expenses that seem necessary to us but are, in practice, superfluous, prevent us from saving.

A crucial first step at this stage is to answer three simple questions: How much do I earn? How much does it cost? And within those expenses, what is truly essential? 

A simple budget – created in Excel or an app – helps to become aware of fixed and variable expenses, but also of dispensable ones; and to find out how much we will be able to save.

Savings: the first step towards future goals

Savings are the portion of income that we don't use for consumption, and without savings, there is no investment.

An easy rule to apply is to "pay yourself first," but once essential expenses are covered, a portion of your salary is automatically set aside. It doesn't have to be much: Even a 10% or 15% increase makes a difference when applied systematically over time.

Savings typically serve two main purposes:

• Emergency fund - a reserve, ideally equivalent to six months of essential expenses, to cope with unforeseen events, such as unemployment or health problems;
• Medium and long-term goals – achieving objectives related to housing, education, personal projects, or retirement.

However, saving money, by itself, is rarely enough.

The problem of money "sitting" in the bank.

Keeping savings idle in a current account or deposit slip may seem safe, but it carries a silent risk: Inflation.

Since interest rates on deposits rarely offset rising prices (inflation), money may retain its face value, but it loses real value. This means that more money will be needed to cover consumer expenses, leaving less for saving and investing. 

Therefore, in practice, leaving money idle for many years usually means gradual impoverishment.

Investment: to protect and grow the real value of savings

Investing consists of applying savings to assets with the potential to generate returns over time. 

Although it involves some risk, this is the main way to increase the likelihood of preserving and growing the real value of money, protecting it from inflation and bringing it closer to future goals.

There are several options – investment funds, stocks, bonds, real estate, among others – with different levels of risk and return opportunities. The key is to understand that risk and return are typically related and that investment should be viewed as a medium- to long-term process. 

A simple financial plan… and SMART

Drawing up a financial plan is the starting point, and it doesn't have to be rocket science. It just needs to be SMART:

• Sensible – Clearly define how much you can save monthly, both to start investing and to increase your investment over time.
• Measurable – Being able to track what has already been achieved and what still needs to be achieved, without the need to constantly monitor results, thus avoiding emotional decisions.
• Achievable – Set ambitious but realistic goals considering your income, expenses, and personal circumstances.
• Relevant – Ensure that the defined objectives reflect what is truly important to each individual and their future.
• Time-bound – Setting a clear time horizon helps define the savings and investment strategy and maintains motivation.

Turning this plan into concrete decisions can be challenging. Consulting investment specialists can help translate objectives into solutions tailored to individual risk profiles, time horizons, and specific goals, preventing hasty decisions or decisions that are misaligned with what is truly important to achieve in the future.