It is no wonder that American’s cannot save. There is nothing in our culture that promotes keeping your income. You need to keep up with the Jones’s. If you don’t have the bigger house or the new car, you’re not successful in life. We are taught from a young age that image is everything, so buy it.
While there is nothing wrong with having things, it is important to know how to save money to be able to get them. Saving and living within your means gives you the best chance of affording the things you want without overextending to get it. It is possible. You can start getting onto the road of saving.
First, you need to have a reason to save. Why do you need to keep your money? What are your goals? Having clearly defined goals will help establish a discipline to help meet that objective. Maybe the goal is to save for a car, a house, a trip, or retirement. Once you know where you want to go, then you can start the journey on how to get there.
Next, you need to find the money. The sage old advice says to save 10% of your income. Well, that is easier said than done. The point is that you need to start somewhere. Many financial institutions have financial calculators on their websites that can help calculate how much you need to save each month to get to a certain dollar amount in a certain number of years. This information is helpful because if you don’t know what the end number is then you won’t know how much to put away. For example, if you save $150 a month for 20 years with a 3% interest rate, you will have a bit under $50,000 at the end.
Now you ask, where can you find the money to put aside? This is where priorities come into play. This step might take some sacrifice. Unfortunately, not many people were taught delayed gratification growing up, but here is where it comes in handy. Sacrifice a little today for a better tomorrow. Is going out 4 or 5 times less a month worth $50,000 down the road?
This is where a budget can be a life saver. Again, many financial websites have templates that can be used to help figure out what your monthly expenses are compared to your income. This will be helpful in seeing areas that might be cut to help set aside some funds for the future. You must live within your means today so you can live your dreams tomorrow.
Last, is consistency. Don’t stop. Don’t give up. If you stop putting the funds aside, you are robbing from yourself. Yes, there are always reasons for wanting to spend the funds you earmarked for savings. There is always a gift to buy or a sale at the mall, but if you budget correctly, you should have money for these occasional wants and needs.