Do you find it hard to save money? Are you finding that at the end of each month you know approximately how much you've spent on bills and other expenses, but not how much you've saved or invested? Saving is a habit; if you can figure out how to feel good about doing it, then you are more likely to keep at it and not feel deprived.
Why is saving important?
Saving is important because you can't predict the future. If you could then you'd know exactly how much money you'd need and when. Research has shown that money issues is the # 1 cause of stress. Stress can lead to issues such as depression, heart disease and a host of other illnesses.
The trick to saving
One trick to saving money is to pay yourself. Everybody else gets a cut out of your earners - the tax man, the utilities man, etc - so why not you? You work hard so you deserve it. Saving from a non-judgmental place allows you to feel good about yourself.
I know what you're saying. You're saving that there's no way this can work! At first, I thought so as well. Here's how I did it.
1. Open an account that isn't easily accessible at a financial institution . Call this account the "Me Account".
I opened my account at a credit union. I didn't take out a bank card for this account, which meant no ATM transactions for me. If I wanted money from this account, I'd have to drive to the credit union and wait in a queue. I hate queues, so this was deterrent for me from withdrawing money from my Me Account.
2. Whether you earn weekly, fortnightly, monthly or infrequently, set aside an amount for your Me Account every single time that you get paid.
When I just started out, owing to my lack of discipline and consistency, I had to set up a recurring deduction from my regular earnings account which was held at another institution to my Me Account. Over the years, I have become disciplined and have since cancelled the recurring deduction (also saving on bank fees). I currently pay myself via online banking.
3. Track the growth of your Me Account.
You must have a goal for your Me Account. Goals could include treating yourself to something nice or to invest or to pay off some bad debt such as your credit cards. My first goal was to buy a car.
Where does the 'extra' money come from?
You're probably thinking by now that you don't have any 'extra' money to pay yourself. If you take some time to analyse your spending habits in detail, you may just be pleasantly surprised at the 'extra' money you'll find. I know I was. Here are a few places that I found some 'extra' money for my Me Account.
- I started giving away more of my money to outreach ministries and other such causes. This is a basic principle of the universe - the more you give, the more you get. So for example, if you want more love in your life, you have to give away more of your love.
- every time I decided not to eat out, I used that money to pay myself;
- whenever I earned more than the usual or expected amount, the excess went into my Me Account;
- I realized I was paying way too much in bank charges, so I converted my account to one with less fees;
- I stopped walking with excess cash in my purse. For whatever reason, whenever I had cash in my purse, I felt like I had to spend it.
- I reduced the amount shoes I bought. After all, I only have 2 feet and I can only wear one pair of shoes at a time.
Saving (and ultimately investing) is a habit. Sometimes you've got to start out small, so there's no need to have small savings shame. And remember that:
"Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver." - Ayn Rand