The washing machine breaks down, an unexpected dismissal comes along, or you start longing for a home of your own – it's precisely for moments like these that having something saved up is priceless. But how do you make sure your savings not only cover unexpected expenses but at the same time don't lose their value? In this article we'll show you how to save money in the most effective way, and we'll also take a peek at how Czechs save, what they do right, and what they don't.
Why is saving important?
The answer to this question is easy: Unexpected expenses, loss of a job, achieving long-term financial goals. Those are the three main reasons to save.
But saving isn't just about putting money away "for harder times", it's also about ensuring peace of mind and financial independence.
That's why the questions of how to save and how best to save money are crucial for anyone who wants to have a financially secure future.
How do Czechs save?
This may surprise you, but Czechs are among the thrifty nations – at least within the EU. According to the prosperity index, in 2024 Czechs managed to save around 16.4 % of their income. Most often, however, they put it into non-term accounts, with roughly 50 % being current accounts and the remaining 50 % various kinds of savings accounts.
However much it may look as though Czechs don't have a taste for investing, that is not the case. Year on year, the number of new investors in mutual funds is rising (by 6.8 % between 2023 and 2024), and so is the volume of investments – by almost 20 %.
The average savings of Czechs
Statistics state that the average Czech has CZK 900,000 saved up. In practice, however, this does not mean that every inhabitant of Czechia has almost a million in their bank account. This data is, after all, significantly influenced by a minority of the population that regularly invests and effectively grows its finances.
The amount of money saved also varies significantly depending on age, income and region. Many people still do not know how best to grow their money. That's why the statistics in reality look as follows:
- approximately 30 % of Czechs have over CZK 300,000 saved up,
- approximately 64 % of Czechs have saved less than CZK 300,000,
- 17 % of Czechs have no long-term savings whatsoever.
Correctly set up saving is, however, the foundation for healthy finances and for being secured against unexpected expenses or future goals. How to do it right?
How to start saving?
The beginnings of saving are simple! All you need are the following 4 steps:
- Set your goals: Determine what you want to save for – a financial reserve, an investment or a big purchase? When you know where you're heading, you're more motivated (and at the same time it will help you in step 4 to choose a suitable financial product).
- Write down your income vs. expenses: Where does your money go? Try to record it honestly for at least one month. Then you'll see for yourself, in black and white, where your money is leaking away. Awareness is always the first step towards change!
- Determine a percentage of your income to save: Based on point 2, draw up a budget and determine what percentage of your income you are able to set aside and save each month.
- Choose the right financial instrument:
- Savings account
- Advantages: Easy access to your money (liquidity); Low risk, the money is insured up to a certain amount; No or low management fees.
- Disadvantages: Low interest that often does not cover inflation; Limited options for growth.
- Term deposit
- Advantages: Higher interest than with a savings account; Stability, the interest rate is guaranteed; Deposit insurance.
- Disadvantages: The money is tied up for a certain period (lower liquidity); Penalties for early withdrawal.
- Building savings
- Advantages: State support (up to CZK 1,000 a year in the Czech Republic); The option of a favourable housing loan; Low risk, the money is insured.
- Disadvantages: Limited use of the savings (mostly for housing); The need to observe a minimum saving period (6 years in the Czech Republic); Account management fees.
- Supplementary pension saving
- Advantages: State contributions and tax breaks; The option of contributions from your employer; Long-term growth higher than on savings accounts.
- Disadvantages: Limited access to the money before retirement age; The risk of value fluctuations (with dynamic funds); Fund management fees.
- Investment saving (e.g. mutual funds)
- Advantages: Potentially high growth; A wide range of products according to your risk profile; The option of regular investments.
- Disadvantages: Higher risk of the investment losing value; Management and transaction fees; The return is not guaranteed.
- Micro-investments in real estate
- Advantages: Accessible even to small investors (the option of starting with low amounts); Income from rentals as well as from the sale; The transparency and clarity of the investment platform; Diversification of risk thanks to investing in various properties; Lower time demands compared with directly owning real estate.
- Disadvantages: Lower liquidity compared with other types of saving (selling a share can take a longer time); The risk associated with the development of the real estate market; The return is not guaranteed and can fluctuate (as with all investments).
Tip: Automate your payments (through a standing order).
Are you afraid of investing because it's associated with risk? Read the basics of investing and overcome your fear!
Frequently asked: What interest is good?
What is interest? In this context it is the reward that is credited to your account as the growth of the funds you have deposited.
Now the less pleasant news: Interest rates on savings accounts are falling. Every month. For example, in November 2024 the highest interest on savings accounts across Czechia was 4.2 %, and even that only for deposits up to half a million.
If you're looking for the best saving, it's necessary to monitor and compare the current interest rates on savings accounts or term deposits.
It's also important to understand that saving in accounts or deposit products does not bring significant growth. It's rather a way to safely carry the value of money into the future.
How much to save?
When you're thinking about how much to save, take into account your income, expenses and long-term goals. The important thing is to start regularly and gradually increase the amounts once your financial situation improves.
Experts recommend saving at least 10 % of your income. But you can also start lower if your financial situation doesn't allow it. At the beginning, forming a habit is key.
Of course, you can also regularly save a higher percentage; just make sure that it doesn't throw you into a constant cycle of "borrowing" from your own savings account.
The most advantageous strategy: Diversification
Before we get to the most advantageous strategy, let's distinguish between saving and investing.
- Saving, for example in a savings account, serves primarily to preserve the nominal value of money with a small increase.
- Investing, on the other hand, involves higher risk but offers greater potential for growing your funds.
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Combining saving and investing can then be the key to long-term financial growth. Diversification across various instruments minimises the risk of loss and increases the return.
- Saving: Ideal for emergency reserves.
- Investing: For example, micro-investments in real estate through InvestBay combine the stability of real estate with the accessibility of small entry investments.
With real estate investments it's also important to distinguish between a property you use for your own housing and an investment property. A property you live in does not bring active income, and its growth in value is often only a theoretical profit for the owner.
How to save advantageously with low risk?
What low-risk saving options exist, how to take advantage of state support, and what to watch out for so that unnecessary fees don't burden your savings?
Safe saving guarantees stable returns, even if they aren't as high as with riskier investments. The most common instruments include:
- Savings accounts: Savings accounts offer flexibility and immediate access to your money. They are ideal for keeping a reserve for unexpected expenses, with deposits insured up to EUR 100,000. Even though interest rates often do not cover inflation, they are a safe choice for short-term saving.
- Building savings: This product combines saving with the option of obtaining state support (from 2024 a maximum of CZK 1,000 a year). Even though building savings has lower liquidity (the money can be withdrawn only after six years), it is still a popular instrument for safely growing your finances. It is suitable, for example, for saving up for a home renovation.
- Term deposits: This instrument is ideal if you know you won't need the funds for a certain period. It offers higher interest rates than current or savings accounts, but with limited flexibility.
State support options for saving
State support is a significant benefit that increases the efficiency of saving. The main options include:
- Supplementary pension insurance: This product is intended for long-term saving for retirement. In addition to your own contributions, you receive state contributions, which can reach up to CZK 2,760 a year, and on top of that you have the option of claiming tax deductions. Supplementary pension insurance is ideal for those who want to save safely for old age.
- Long-term investment product (DIP): The DIP is a modern instrument introduced with the aim of motivating citizens to save and invest for retirement over the long term. It includes tax advantages and the option of a flexible investment strategy that combines low risk with a potentially higher return. The DIP can include, for example, mutual funds or bonds.
- Building savings: State support amounting to 10 % of the amount saved annually (up to CZK 1,000) remains one of the main reasons why building savings is still popular. Thanks to this support, it's possible to achieve higher growth even with low risk.
How to avoid unnecessary fees when saving
Many savings products are associated with various fees that can unnecessarily reduce your returns. Here are a few tips on how to avoid these costs:
- Compare offers: Use online product comparison tools to find the most advantageous savings account, building savings or other product with minimal fees.
- Ask about the terms: When concluding a contract, make sure you understand all the fees, including those for account management, withdrawing funds or early termination of the contract.
- Watch for promotions and bonuses: Some financial institutions offer time-limited promotions that can significantly reduce or completely eliminate fees.
- Make use of state support: Products that include state support (e.g. building savings or supplementary pension insurance) often have lower fees than other forms of saving.
How does InvestBay help make use of Czechs' savings?
InvestBay offers a platform that makes it possible to turn passively saved money into active growth through micro-investments in real estate. You can start from as little as CZK 2,500, which makes investing accessible even to beginners. If you're looking for how to save most advantageously, InvestBay is a great choice.
Recap: How best to save money and achieve your goals
Saving is the foundation of financial security. The combination of regularity, diversification and the use of innovative platforms such as InvestBay makes it possible not only to protect savings but also to grow them effectively.
Start with small steps, save and invest regularly. It is admittedly a long-distance run, but the result is sweet.
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