Are you in the habit of saving money regularly? If you are, I’m sure you’ll agree there is no greater satisfaction than watching some of your hard-earned income get tucked away each month.
But sadly, not everyone has a good saving’s habit. Saving money has been and will continue to be a challenge for most people because there never seems to be enough of it to go around. Yet despite the barriers, some people save, though not always for the most important purpose – the intent to create wealth.
Typically, most of us are focused on more immediate financial concerns – things that seem to syphon away our money into a big economic void, leaving us with little or nothing left for wealth-building. Allow me to explain.
The General View about Savings
Just about everything we do with money is geared toward spending. Although some financial experts encourage the masses to save, the money is usually earmarked for something that will eventually deplete the savings, taking the saver back down to zero where he or she must repeat the process for another purchase.
Here are a few of the most common reasons for saving money:
- A college education
- Down payment on a car or a house
- Annual vacation
- Emergency reserve
By themselves, some of these practices are good. I would encourage a few but not all. For instances, putting money down on a car or a house is a waste of funds. Yet, the practice is popular. Notice also that all these funds will get spent on something—most likely for the intended purpose. At which time, the money will be gone forever.
Another misguided concept about savings is this: We believe that when we buy things on sale, we’re getting ahead financially. Powerful commercial bites such as “Buy now and save,” or “This deal won’t last long” keep us shopping. The same goes for money-saving opportunities offered by red tags sales, discounted items, and so forth. The idea is the less you pay for things, the better off you are financially.
But this is true only if you BANK or SAVE the difference you gain from the original purchase. If you SPEND it on something else, you make no financial headway. While you gained more possessions (stuff), your bank account remained empty, leaving you behind in terms of financial progress.
If you’re in your twenties or early thirties and want to be financially successful, you cannot buy into this temporary savings’ philosophy. If you do and make a habit of it, you will stay broke all your life and retire poor, which is the current state of most working and retired Americans.
Saving for Financial Growth
If you’re not used to the idea of wealth-building, the prospect of becoming financially well-off could be daunting, particularly if you’re struggling to make ends meet. But even at this stage, it need not be. At this point in the game, there is no need to think about the complicated aspects of Wall Street, stocks, bonds, mutual funds and so forth. You will eventually get to know these things as you strengthen your financial base, which should be your most important economic goal at this time.
Assuming your goal is to become financially free, meaning having enough money to do what you want, there are things you can do NOW to get the ball rolling in that direction.
Most immediately, you need to know that the way to the top has many paths. The most popular one is through business, which I will address in future posts. The next most common way is through savings. Some of the wealthiest people in the world started with this one. John D. Rockefeller, Warren Buffett, and others started their multibillion-dollar empires with nickels and dimes. There is no reason you can’t do the same.
As you think about building a solid financial future, you will run into many roadblocks designed to deter your progress. The biggest one will be self (YOU): personal doubt, procrastination, self-pity, excuses, and others. You need to fight these feelings and forge your way ahead with purpose.
Also, you need to embrace these concepts to facilitate the process:
- Avoid thinking that you’re not making enough money to begin a wealth-building program. Statistically, we habitually waste about 10 percent of our money each month. You can capture at least some of that wasted money to pave your way to financial freedom.
- Open a savings account…today! Start with a dollar or the minimum that your bank requires. Though the amount of money you save does make a big difference eventually, the steady savings habit you develop along the way is more important now for your overall success. So, don’t postpone this initial step. Get it going!
- Save regularly and diligently. Consider putting 20 percent of your income into a savings account each month, half of which should be devoted to wealth-building. If this percentage is too high due to other financial obligations, drop it down to 10 percent. If that’s still too high, save 5 percent. And if that’s still too much, start with 1 percent. The point is to select a comfortable level of savings for consistency. Frankly, the savings discipline is more important at this point than the money you put away.
- Think big. Every dollar you save gets you a little closer to financial freedom. The more you save, the quicker you will experience the reality. Take pride in the fact that you’re doing something good for yourself—saving money, which few people can do these days.
- This is critical. The money in your wealth-building program is not for use! It is your nest egg; your “get-ahead money.” Savings for a big screen television, down payment on a car, etc., should be done separately. Otherwise, what’s the point of saving money for wealth-building if you withdraw a portion of it periodically to buy things? It would be like planting a small tree and breaking off the tender leaves and branches whenever they appear. The tree would die. The same thing would happen with your savings program. Once you start withdrawing money from your savings, the process doesn’t stop until the account gets empty. Rebuilding it is much harder than you think. So, the point is to KEEP SAVING and don’t withdraw. In time, this small bundle of money will build on itself, and you can use it for larger investments that can catapult you into financial freedom.
- Get into the habit of thinking long-term. If you continually worry about meeting the needs of the present by sacrificing those of the future, your financial situation will reflect the same thing. You will most likely live in a state of scrambling for money all your life, hence the paycheck-to-paycheck routine that most people experience. Forward thinking will help you overcome this problem. This includes your proactive savings program.
- Equally important is this: You need to start your wealth-building program today…not tomorrow, but TODAY. This is your first attempt in defeating procrastination. Putting off things that can and should be done today for tomorrow is a waste of your valuable life. Such a habit will add months and years to your life with little progress to show. This is especially true with matters of personal finance. Work on breaking the delaying habit by taking immediate action…NOW!
- And finally, refuse to be lured into spending by infomercials that evoke feelings of empathy, guilt, and self-pity. If you allow your emotions to dictate your decision to spend, you will have great difficulty saving money. Here, you’re not the one in control of your life; you’re being led by others.
The preceding list is short and simple but essential for your overall financial growth and stability. As indicated, the most important thing is to implement them right away. YOU have the power to make this happen. So, begin your journey to financial independence today!
Thanks for reading.