Saving money is one of those consensus things. Almost anyone will tell you it’s a good thing to do. In fact, saving money on a regular basis has been classified as a very good habit. Unfortunately, most of us aren’t a money saving expert. That’s where the rub comes in, the actual “how to save it” part of the habit.
Simply starting this very good habit is one of the best ways to save money. All you have to do is make a commitment to start saving your money. Once you commit to saving money, you will begin to develop and adopt what some people term as an efficient savings system. Efficient because it is growing your net worth. Profitable could be substituted for efficient given your money will be growing at interest.
The first step after commitment is to decide how much money to save. That is the beginning point for every money saving goal. In financial circles, ten percent of your monthly net income is bandied about as if it was the holy grail.
The truth is, it depends on your situation at the time. The best course of action is to start with whatever amount you can afford. As you pay down bills, you can increase your savings amount.
As with everything in life, proven techniques have already been developed to make the process easy to accomplish. In fact, any one of these techniques will jump start your money saving venture.
If it is at all possible, have your accounting department begin a payroll deduction from your paycheck. The money should be sent to the institution you have your savings account.
Or, if you don’t have access to payroll deduction, automatically transfer money from your checking account into your savings account. Most banks offer this service to their members. Sometimes, you have to do it manually but regardless, get started and it will become the natural thing to do.
Many people use a technique that significantly improves their savings account. They save all or a large portion of each raise they receive and continue their life style as if they had not received a raise.
Almost all of us have received bonuses, income tax refunds and cash gifts. We know we can either spend that money or save it. Save it and you’ll be dollars ahead. Sometimes this is so obvious people overlook it as a savings source.
This may sound penny ante but it works. Save all of your spare change. Rather than spend the change in your pocket, put it in a container at the end of the day and put it in the bank once or twice a month. Savings dollars this way just makes sense.
When you pay off your loans, don’t spend that payment amount. Instead, put it in your savings account. That should add quite a boost to your savings balance.
Believe it or not, an emergency fund should be part of every savings plan. An emergency fund is three to six months of essential living expenses set aside. With this amount of money put aside, you won’t normally have to tap your savings account to pay those expenses.
Emergencies can happen to anyone at anytime. Keep some money set aside to handle them. If your car breaks down or you get a flat tire or the sink starts leaking or whatever, you will need money to pay for the repairs. Your emergency fund will be there to lighten the expense load associated with these events.