Are You Saving Money?
Developing a habit of saving money requires self-control and self-discipline. If you don’t think it is important just try to get a mortgage or car loan and see how well you do. According to the Huffington Post 50% of Americans have less than $500 in their savings account. How can this be when we are one of the richest countries on earth?
If you don’t have a savings account and/or an emergency fund it’s your fault. According to some financial experts you should be saving 10% of all your income. If you have been working for 10 years at an average income of $46,000 per year according to statistics. You should have $46,000 liquid cash in your savings account.
I am not speaking about 401k’s, pension, or other retirement plans. I am talking about cash money. You are red lining your finances if you don’t have an emergency fund of at least $1000. You risk going into debt when unexpected emergencies happen. Ideally you should have 6-9 months of emergency funds stashed away. Invest the rest of your cash in income producing assets.
In 2006 I hit rock bottom. I was broke and looking for a job. I couldn’t sell a house. I lost my investments, and was living off borrowed money. I knew about paying yourself first. I read all the books but I did not practice what I learned. I cashed in my 410k and lived off that until those funds ran out. If I would have established a habit of saving money, I could have survived the real estate downturn.
I found a job with benefits and vowed never to go broke again. Five years later I still carry around the first $10 I saved from my first paycheck. Developing a habit of saving money has help me grow my real estate and online marketing business. I love saving money now. When opportunities arrive I can take advantage of them.
You as a home based business owner need to develop a habit of saving money. There are opportunities abound when you have access to cash. Lenders are more friendly. Investors come knocking when you show a habit of saving money. Saving is a discipline. You must delay gratification. You have to cut back, eliminate expenses, and not be tempted to spend.
We see entertainers, athletes, and lotto winners go broke because they spent all they earned. It doesn’t matter how much you money you have if you spend it all.
Here are 3.5 ways to develop a habit of saving money:
1. Decide To Save – Make a decision to start saving money. The basic rule is 10% of your income. Get a bookkeeper or personal financial software and start tracking your expenses. Find out where your money is going. Your home based business has tax advantages that can help you save more.
I started saving money with only $5 per week and I increased it gradually. I don’t care how much you save or what percentages you use. Just as long as you start and stay consistent with it.
2. Make your savings an expense – Pay yourself first. Treat your savings like your car note, credit card bill, or mortgage payment. Most people cringe when bill collectors call. Use that same fear to save. Have automatic deductions from your checking account, paycheck, or merchant account go right into your savings. Just like taxes are taking out of a paycheck and most people don’t notice it. You won’t notice the automatic deductions.
3. Read for 15-30 minutes per day – Your home based business depends on you. Leaders are readers. Read books on personal finance, money management, investing, and personal development. Start with the Richest Man in Babylon, by George Clauson, followed by Think and Grow Rich, by Napoleon Hill.
3.5 Pay off your debts – Some experts say that you should pay off your debts first. From my experience I say do both. I remember paying off all my debts and still did not have money saved. Then I went back into debt when unexpected expenses arrived. Put a portion of your income to savings and a portion to debt.
Develop a habit of saving money now. Your home based business depends on it. A habit of saving money is the best way to take care of emergencies, unexpected expenses, and it gives you the ability to act when business opportunities arrive.