We could all do with trying a little harder at everything. A bit harder in the gym to shed the pounds, a bit harder at work to earn a promotion, a bit harder with our education to give us better prospects. It’s all about doing our best when we can to boost what we can!
So why don’t we all try hard to save money? Building a savings account can do a lot not just for our short-term financial security, but can also open up some amazing opportunities for us in the future. Not only can saving money allow us to buy what we want (from masses of YA fiction to a holiday abroad), but it’s the right thing to do for ourselves and our families.
One in five people have no savings at all. Nothing whatsoever. People seem to be getting into more jobs, people seem to be getting paid more and it looks like the economy might be in good health - but people aren't saving and are relying on just their monthly wages to get by. If something goes wrong in their lives, there is going to be no safety blanket - what do they do if something goes wrong and extra costs come out of nowhere?
It’s time to start putting money away. The best way to do that is to stay clear of any debts. There's something we all really want right now - the trouble is, life is allowing us to think we can get it before we can afford it. Credit cards and loans are ways that we can get anything we want, right now without working for it and truly earning for it. This instant gratification is dangerous! If you can get anything and are prepared to spend money you don't have, you're developing a seriously unhealthy spending habit that is going to cause you a lot of trouble and it won’t get you far. Debt is an easy thing to acquire and it will prevent you from saving. Why? Because the interest on debt is going to be way higher than the interest on even the most generous of savings accounts provided by a bank. If you don’t pay off debts, they build because of interest and that building of debt is going to outpace the speed of growth in your savings account by a long shot. Don’t waste money if you have debts, get rid of them! The big fight is against that feeling of gratification that buying provides us, but it can take away our financial safety nets and leave us high and dry. Will your new product care if you can’t keep up with your debts?
If you are debt free, keep it that way. It's a hard fight due to the onslaught of commercials and advertising directed at you as well as unforgiving finance deals and horrendous terms and conditions, but like anything good in life, you're going to have to fight for it.
Next? Start spending a lot less than you earn to build an excess of money at the end of every working month. This excess is now your savings, and you can use that to either buy what you want or you can put it into your savings account.
With an excess, next time you want something - a new TV, to pay more from your mortgage, an iPad - anything at all - you'll be able to get it with the help of saving up! It's a good habit, even if you are spending it on things like electronics and those saving habits can go a long way in the future.
To build your excess start to budget. One way to cut your monthly spend is to actually know what your monthly spend is. Keep your receipts and build a nice spreadsheet up to see some detailed expenses. Could you cut some money on beer each month? Do it! Could you save some money by walking a bit more? Do it! This is a good way to live frugally that doesn't take everything away from you. Spend less on clothes, food and the other expenses that cut into your excess so you can either save or buy things you actually want rather than things that make you happy for five minutes.
Sometimes, spending is a big part of saving. Say, for example, that you need to have your fresh pressed coffee from a coffee shop twice a day at eight dollars a go. That's sixteen dollars a day. In ten days that's 160 dollars, and in 100 it's 1600 dollars. A 150 dollar coffee machine does not cost 1600 dollars, thus saving you a fair bit of money in the long run, probably as much as half. You could cut coffee out in this example, but why should you unless you really want to save a lot of cash? You can also build your savings by selling things you don't want - the book collection you won't read or the blu-rays you won't watch can go to boost your savings. You can also get rid of gift cards you won't use to get some cash and that process is detailed at Cards2Cash.com. Do everything you can to boost your savings in the initial stage.
Finally, when you're in a good savings position, try to put down saving money as an expense. Putting 10% of your salary away a month as well as your excess is a great way to build cash in the short term. Ideally, you want six months of expenses saved up for any emergency situation.
When it comes to saving, spending should be seen as a reward. That gratification? It should be as a reward and not an everyday thing. Dangerous habits can develop if we get too used to spending lots of money, so steer clear of it to avoid debt and to develop the cash you can use to build your savings and access the rest of your life. It doesn’t have to be too much of a drag.