ARTICLES > The Importance of Saving.
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The Importance of Saving.
Having a regular savings programme can enable two things;
So, how do you save?I was talking to a friend of mine recently who said she simply could not save. She tried but, at the end of the month she had nothing left. “You see,” she said, “it’s impossible.”Not so. My friend was making the mistake so many of us make. She saw saving as something that was done with left over money rather than something that needed to be a priority in her life. The secret to saving is simple – here’s a checklist;Pay yourself first! This is the simple answer to saving. Before you spend all your money give some to yourself in the form of savings. In the same way as you set aside money in your budget for mortgage, power, water, groceries etc. put aside money for savings. Perhaps even set up a separate savings account for this purpose. Determine ahead of time what that saving is for. It’s hard to save when you don’t have a goal. It can seem rather futile to have money in the bank ‘just in case.’ Work out what you are saving for, how much you’ll need, when you need it and how much you’ll need to save each payday to reach that amount in the time you want it. Of course, an emergency fund will have no such deadline. Simply set an amount to have as your emergency backup and try to ensure it is always there. Don’t steal! The mistake many people make is to get so close to their goal and then go and blow their savings on a whim. Sure, sometimes emergencies arise and we need to dip into our savings, but that should be a rare occurrence. Keep your goal in mind and don’t let anything deter you from it. Celebrate when you achieve your goal. Some people are supremely organised and have charts and figures so they know at any given moment exactly where they are at with their finances. That’s great – some of us are more organised than others. What everyone should do, however, is to know how much they need and when they have reached that amount. And when we do, we should celebrate. If you’re wanting to set aside, say, $1000 as an emergency fund, once you reach that amount celebrate by shouting yourself to the movies or out for dinner or something frivolous. After all, money is there to be enjoyed. A quick reminder – if you have debt other than your mortgage, pay off that debt first. The interest you are paying on your debt will usually be greater than that you are receiving for money in the bank. That means it makes best financial sense to go pay off debt before commencing your savings programme.
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