I know I have said this enough times, but sometimes there are topics that no matter how many times you repeat them, you will never really capture the importance of the topic. Take the example of saving, a lot of people always have a reason not to save or put money aside on a monthly basis. People view this as a way of reducing their current income, but what they forget is that they are at the same time increasing their future income. So the next time you come up with an excuse not to save, think of all the emergencies that may require ready cash that you may not have, or living a comfortable retirement life, or meeting your kids future college education expenses etc. The best way to see the potential benefits of saving is reading the following article by Nelson Taff, who is practising what he preaches.
You have to realise the importance of saving money. It’s a very good idea to have some cash stashed away, as in life, we can never predict what the future might bring, what emergencies are around the corner that require us to splash some cash. By putting money aside, you’re insuring yourself against any unexpected event. When you do begin saving, and have a fair amount saved, even if just to cover a months worth of expenses, you’ll feel a good sense of accomplishment and a drive to save more. Gradually building this up as time passes, you’ll feel more secure in your life, as you’ll know that if for whatever reason you did happen to lose your job, you’d be prepared for a certain period, instead of panicking, wondering how you were going to pay the next upcoming bill.
A key point in saving cash is identifying precisely why you’re saving money to begin with. Maybe, it’s as I suggested in the last paragraph, you’re saving as you would like to be able to cover yourself in an emergency, or perhaps it’s something entirely different, by way of example, saving in order to go on holiday to a destination you’ve only dreamt about. In spite of the key reason why, stating it, writing it down, and keeping it fresh in your thoughts can help you in staying on track. When beginning to save, I’d recommend before saving for any particular item, that you save for you first, so saving for an emergency fund, which acts as your back-up. In my opinion, you really want to aim for about six months worth of bills, which should ensure that you get ample time in order to find another job. Once you’ve reached your safety net, I then personally recommend to begin saving to one’s retirement, along with anything else in which you ought to save for. I save for both concurrently. I have my emergency fund already sorted, so I’m now splitting my salary, and putting some of it aside into a retirement fund, and some of it towards my holiday to America.
Again, it is also imperative that you set realistic expectations. There is no point in stating that you’ll save 50% of your next wage, if you frequently end up broke a week before your next payday. Doing this is setting yourself up for failure. Instead, set an objective you know you could keep, yet which will help you on your way. Not too small of a goal, though not too large either. Each pay check I receive, I automatically take a 10% cut off and place into my retirement fund. I then take another 5% and place this into my holiday fund. A combined total of 15% each and every month in savings. It is a low figure, and when you element in that I’m being economical elsewhere, i.e. I will no longer buy a coffee along the way to work, after a matter of months you’ll notice a large improvement inside your financial situation.
My Final piece of advice when planning to save is to pay yourself first. Paying yourself first basically means that before you spend cash within your pay check, before you’ll pay any bill, or buy any item of food, the 1st payment from your account must be going from your bank account, right into a savings account. The simplest way I’ve found of managing this is to set up an automatic system with my bank. I performed this by creating another account, and telling them that right at the end of the month, which is the day that I am paid, I would like some money to go out of this account, and to be transferred to my new account. This occurs monthly automatically. Therefore, I’m saving my money monthly automatically.
I hope you’ve found this informative article an appealing read, and that it can help you on your way to financial freedom.