Do you have a savings account? Believing that you can control your financial life is an important step in the process of developing financial confidence. The reverse (not managing your money) inspires a critical lack of financial confidence. Other family members will follow your lead. You develop an order and procedure for your financial activities, and they will do the same. For each member of the family, confidence comes from knowing that he is doing the right thing and doing it well. Gaining financial confidence is the same. Adopt the right principles, practice them regularly, and the results will not only strengthen your confidence, it will allow you to dare take other confidence-building steps such as budgeting, financial planning and spending reduction. Many people are afraid to take control of their financial lives because no one has showed them how. You won’t have to wait; you are receiving valuable information that will help you gain confidence. You, Too, Can Save!
Save A Little, Gain A Lot
Do you have a savings account? If so, are you making regular deposits? If not, why? If you are like many others who have trouble saving money simply because you prefer to spend it, you can use the ideas in this newsletter to help you win at the savings game. Most Americans don’t save as much as they should, but the reason has less to do with dollars and cents or macroeconomics than with how they feel about their cash. To many people, saving money is a punishment while spending it is a reward. It is important that you recognize where you stand on this issue.
Financial planners sometimes fail to connect with clients because they ignore this psychological aspect of saving. If you have had trouble saving because you simply prefer to spend your money, you will want to develop some techniques that will make saving money something you can actually come out winning on. Experts might scoff at this strategy because it is not one designed to get you the highest return. But if you’re saving nothing, and you just can’t seem to get started, what do you have to lose? Right now is the best time to get started on a successful, savings-driven financial strategy.
At the risk of sounding too flippant, the purpose of a savings account is to save money. It’s not rocket science, but the trouble is, for too many Americans, it’s one of the most difficult things to do. We seem to spend virtually everything we earn and have nothing to fall back on when the inevitable emergency hits, other than the unused balance on our credit card. So let’s face it. We’re all much better off if we establish and follow a budget, live within our means, distinguish between needs and wants, and regularly and consistently add money to our savings account and watch it grow. For most people there are generally two types of savings: a “rainy day fund” and retirement fund. The rainy day or emergency fund should be at least five to six months’ income, to be used just in case you lose your job or get sick or injured.
Don’t Spend Mindset
Having the proper attitude about spending is critical to being financially independent. Saving money is a lot more difficult than spending it, but saving is also much more productive and will better serve your family over time. Learning to say no to spending requires sound personal commitment and a realistic view of where you want your financial life to be both in the present as well as the future.
However, it all starts by making up your mind that saving is better than spending. If you have future dreams and you can’t afford them, you will have to change your spending habits.
In reality, saving is the opposite of spending. This newsletter is aimed not only at saving money, but also at having you consider that if you want to obtain your future dreams and have what you want, you will have to pay the price. The price is – to save money and not spend it.
The message is clear, don’t buy it if you don’t pay cash! This may be difficult at first, but it can become a habit —a habit that will pay huge dividends. Paying cash doesn’t mean that you stop buying the things you need (or want), but it means that you save and buy those things when you can pay for them with cash. It is recommended that while you are waiting to save enough cash to make your purchase, you place the money in a secure savings account. This will facilitate you to get your savings habit started and will help you avoid using the money on something less important to your long-term spending plans and objectives. Everything you do which prevents spending money will help you attain your financial goals.
Budgeting Tip from an FFEF Counselor
A few years ago, I was too impatient to wait for a bus and took a cab 2 or 3 times a week. After having some financial struggles, I decided to make a few changes to my lifestyle. Every time I had the urge to splurge and resisted, I went home and put the money that I would have otherwise spent in a shoebox i.e. if I wanted to take a cab but took a bus instead, I would save $10. At the end of 2 months, I was astonished to see that I had saved $340.