Without even knowing you, let me see if I can describe the situation you’re in. You’re starting off 2007 with great intentions. You want to save for retirement, or for college, or maybe you’d just feel a whole lot safer knowing that you have a bit of a financial cushion, in case of some unexpected emergency or job loss. Despite these good intentions, you’re not saving as much as you’d like. Or maybe you’re not saving anything at all.
It seems too hard, you tell yourself impossible even. The whole idea of spare` cash doesn’t fit in your vocabulary because your money is spent before you cash your check.
If this is you, take heart. You’re not alone. When we asked people about their savings habits, most of them told us they find it difficult and don’t do as good a job as they would like to do.
So how do you break the cycle of never having enough money to set aside? Or maybe a better question is can you break the cycle?
I strongly believe you can. And I don’t think it has to be difficult. Regardless of your income or budget, most people ` even you ` can learn how to save more money.
The first and most important barrier to overcome is to stop thinking of saving as drudgery. Most people associate savings with some degree of pain. But there’s a positive side to saving money (beyond the actual amount of cash you can set aside).
Simply put, saving money gives you more control and freedom over your life. You can’t hang a price tag on how it feels to know that you’re going to be okay when you retire, or that your kids will receive the education they need, or that you’ll be able to weather a job layoff, or put new brakes on the car when they go, or replace a refrigerator when it leaves a big pool of water on your kitchen floor. Saving money, dare I say, could lower your stress and lead to a healthier and more peaceful life. It’s potentially that powerful, and I think it’s important to acknowledge and appreciate the emotional as well as financial benefits saving can bring you.
It’s also important to have a plan that isn’t overwhelming. With that in mind, let me offer some very simple, easy-to-follow tips for making saving more money a resolution you can stick to.
Automate it. Many employers will allow you to directly deposit a specified amount of your paycheck into a savings account. This has two advantages. It allows you to pay yourself first, and you don’t have to think about it. The savings happens without you having to lift a finger.
Define it. Give your savings goals specific dollar amounts and time frames. And break your overall savings goals down into manageable chunks. Let’s say you’ve set a goal of saving money for a vacation, so you don’t have to take on debt to pay for it. It’s much easier to work toward saving about $35 a week than to tell yourself ` I need to find an extra $2,000.00 in my budget this year. Doing it in small steps also lets you track your progress and gives you a sense of satisfaction as you achieve your weekly and monthly goals.
Make it real. I recommend writing down your savings goals. It can be on a piece of paper stuck to your refrigerator or next to your alarm clock, on a calendar, in your electronic organizer, on your computer desktop ` whatever works for you. It’s just easier to stick to goals if they’re constantly in front of you. If you’re thinking you’ll just remember ` well, think about how well that strategy has worked for you so far.
Make small changes, but make them consistently. The secret to saving large amounts of money is to save small amounts of money on a regular basis over time. Some fortunate few will receive a large, unexpected windfall this year.
Most of the rest of us won’t be so lucky. But we don’t need luck to achieve our goals ` just a little purpose, discipline, and persistence.
For instance, if you were to save a mere $25.00 a week for a year with a modest compounded interest of 1.25 percent, at the end of the year you would have $1,325.00, which could be an extra mortgage payment, or car insurance for a year, or a big screen TV.
Think twenty-five bucks a week is unachievable? Try these ideas:
Review your telephone, cell phone, and cable or satellite TV contracts to see if you can switch to less costly plans or reduce or eliminate some of those bills.
Bring your lunch to work a couple of times a week instead of dining out. Rent a video instead of going out to the movies. Make coffee at home instead of opting to buy premium drive-thru coffee.
Can you car pool to work with a friend or spouse, or use public transportation?
Use coupons when you go grocery shopping and cook a few more meals at home each month instead of going out to eat.
Your automobile is a huge expense. Buying used versus new can save you a lot. So can shopping around for the best loan and insurance rates. And when you do make a purchase, you may want to look for models that get better gas mileage and that don’t have exorbitant sticker prices.
There are hundreds of little ways you can save money each week and with each purchase that won’t leave you feeling as if you’re depriving yourself of living a good life. It all comes down to choices ` and the best question you can ask yourself before making any purchase (to make sure it’s a wise one) is `do I need this, or do I want it?` It’s okay to want things. And it’s okay, on occasion, to buy those things. The trouble begins when the `I wants` outnumber and overshadow the `I needs.`
This year, we celebrate Ben Franklin’s 300th birthday. Among his most famous quotes was `a penny saved is a penny earned.` That couldn’t be truer, and it couldn’t be more apropos for those of us living today. It’s also good to remember that saving doesn’t have to be intimidating, difficult, or boring. In fact, your ability to make sensible financial decisions will broaden your choices and give you increased freedom and buying and borrowing power.
There are too many good reasons to save and not enough valid excuses to procrastinate. So take steps today to ensure that your fiscal future is secure.
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