Here’s the easiest, fastest and most immediate thing you can do right now after you read this blog to start saving: Automate your saving. Go straight to your bank, open a savings account and inform the bank you’ll want $20 transferred to your savings from your checking each time you get paid. If you do that, you’ve formally started saving.
Opening a personal savings account is free. You enjoy the interest in it that you don’t get in a personal checking account. Depending on which bank you go to, you’ll benefit from a tiny 0.001% to a flat rate of 1% a year. Yes, it’s measly but at least there’s something that grows year on year as you add on to that savings account every payday. Don’t take little things like these for granted.
Savings is not where the real wealth is but it’s the seed you’ll need to do the next step to building wealth called investing. That’s investing in yourself or on an asset that generates more money in time. It all starts with your savings.
One other thing that’s wonderful about automating your saving is you won’t even know it, feel it or be aware of it. It’s all happening while you’re busy living. That $20 or whatever amount you automatically put away every payday will grow into something big.
If you choose to put away more, then you’ll save more and grow your savings faster. For some, they choose to put away 5% of their pay each time. For others, they choose to do more. It’s up to you.
Have An Emergency Fund
Here’s one that truly protects your money against any unwanted surprises. Having an emergency fund simply means you open a savings account and designate it as your emergency fund. What for could it be used?
It’s for any surprises when you’ll have to spend money that you don’t normally carry with you. It could be for a medical emergency. It could be for an emergency trip to care for someone in the family. Or it could be for an unexpected cost you forgot to plan for or you missed out.
Typically, an emergency fund you put away is about $1,000.It’s advisable to have the emergency fund separate from the regular savings you’re building for your future needs or investments. It’s your insurance for most financial emergencies you won’t expect.
Get That High-Cost Debt Paid
This is the next biggest thing you can do to get your financial state back in the green. Pay off the high-cost debt as fast as possible. That means to get that student loan, that mortgage, that car loan all paid off as fast as possible.
High-cost debt is the single most debilitating financial vice people have that keeps them from truly being financially free and abundant. If you have debt, you can’t properly invest.
So, if you can, opt for a shorter period of payment plan at the lowest possible interest rate and get them all paid off. That means you’ll have to cut down on your monthly cost – your entertainment, your movie nights, you’re eating out and perhaps your monthly subscriptions. Bringing down your cost of living will significantly help you get off those high-cost debts.
Now, I know you’re feeling like you can’t possibly downgrade your lifestyle. Here’s your reality. If you’ve got the debt to pay, you shouldn’t be living without limit. If you choose to sacrifice for six months to a year, you’ll see you’ll live a better life with significantly less debt.
And when you’ve gotten yourself out, don’t get back in debt no matter what.
Save For Your Retirement
You are seeing how you’ve gotten older. Your body is slowly changing. Your movements are just ever so slightly slower than you were just five years ago. So, knowing that your older self will need your help, getting to it sooner will result in a better life later.
Saving is a great start. But you’ll need to do a little more as you get older. In fact, the sooner you do this, you’ll be far better off later. You’ll have to have retirement savings. If you’re employed, you may choose to get into your company’s 401(k) plan. If you’re saving on your own, you may put your money in the Individual Retirement Arrangement (IRA) or Roth IRA.
Plan Your Savings
Ultimately, it’s all about setting money aside, away from your regular spending. That’s what they mean by paying yourself first because you’re setting money aside to take care of your future needs.
Sit down and plan it out. How will you deal with your big and small debts? Where will you put your money to make it work for you? What are you willing to give up in order to build your investment capital?
Find the answers to these questions and get your savings going today, right now.