Saving money is a beautiful thing. Why? Because it gives you peace of mind, a sense of accomplishment and security. Trust me. It’s better to sleep at night knowing that you have savings as opposed to not having anything or drowning in debt.
First things first. Before you can save money, you should change your attitude from ” I CAN’T SAVE” to “YES, I CAN!!”. The mental preparation is very important. When your mind is set and focused, it will be easier to accomplish your financial goals.
There are three types of savings that we all should have. The first one is the EMERGENCY FUND. Emergency fund should cover your regular monthly expenses SHOULD “emergency” situations arise like car breakdowns, work lay offs etc. Financial gurus advise to have at least six to eight months of emergency fund. For example, if your total monthly expenses amount to $1000, you should have at least $6000 to $8000 in your emergency fund. The second type of savings is the REGULAR SAVINGS. This type of savings is for specific items (usually big ticket items) that we want to have like car, vacation, downpayment to a house etc. And the third type of savings is the RETIREMENT SAVINGS. As the name implies, it’s a long-term type of savings. We use this savings to live comfortably when we retire. I will discuss this further on my future blogs.
I know, I know. There are lots of bills to pay every month, not to mention the unexpected expenses, and when all is paid and done, you barely have anything left. It can be overwhelming. However, SAVING IS NOT IMPOSSIBLE. You just have to prioritize and make some adjustments.
Let me share with you some of my tried and proven formulas in saving money.
1.) Pay Yourself First
This has been said so many times. It’s true. Do you consider your bills to be more important than yourself? I DON’T. I pay myself first.
Make It Automatic – Many employers nowadays offer an automatic deduction of some amount from your paycheck directly deposited to your savings account. Set one up with your payroll personnel. One of the advantages to this set up is that you don’t see the money and you’ll less likely to spend it.
Treat Savings as a Bill – When you create your budget, your number one expense should be your savings. Pay that bill every paycheck and see how it grows in a year or two.
When you receive a bonus, raise, tax refund or any unexpected income, PUT IT IN YOUR SAVINGS. I believe that these are good opportunities to bulk up your savings especially when you’re just starting.
3.) Cut Your Bills
This is a sure-fire way to save. Think of ways on how to cut your bills. It doesn’t have to be drastic. A little cut back here and there can help you build your savings.
4.) “The Coin Approach”
At the end of the day, put those coins in a jar or in a piggy bank. Before you know it, you’ll have savings!
Don’t worry, it’s NEVER too late to save. I started late too. FYI, I was the original ambassador of the “Spend It Club” and there are things, very poor choices that I did with my money.
If you’re a starter, on your first month, maybe you can take out 2% of your net paycheck every pay period.Then, if you are comfortable with that and wants to put more, why not? From 2%, you can make it to 5%, 10% or even 20%…as long as you are comfortable with that amount. The keyword is COMFORTABLE.
So, are you ready to save?? Starting with your next paycheck?