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Saving money is neither a new concept nor one that needs too much discussion but the fact that its the least pro-actively planned budget item is mind-boggling. Saving is just as important a budgeting item as anything else and should be a line item in any budget rather than being the number that remains after all other budget items are accounted for. The logic behind this is simple as brainstormed below...
control your spend...simply speaking, check and double check your monthly budget. There are must have "needs" like rent, insurance payments, grocery, fuel, utilities and there will be "wants" electronics, new clothes, eating out, movies etc. If Saving is not in the "needs", begin by listing it there and assigning a target $ value to it. The best way to save is to wisely spend and put off at least by 24 hours anything that is not on your budget list.
target $ value for saving...every one's economic scenario is different. Some have saved in the past so have something to fall back on, some have utilized it all in the downturn and some have yet to embrace this idea. Rule of thumb simply is "as much as you can". Yes, save the maximum you can every month till you have about 12 months of reserves. Reserves would be your monthly budget for all your "needs" times twelve. This would be a healthy number. Alternately if percentages are your thing, most recommendations are for 20% of your pre-tax income but at least 10% for sure. Getting to that reserve target will take time but the inner peace and confidence that it provides is awesome.
saving tricks...there are several methods people can adopt such that they save automatically which means the money is never with them in the first place to re-direct into a savings account post budgeting. One of them is directing a portion of your salary pre-tax directly into your 401k, second is to direct a portion of your salary into an IRA account, third could be to direct a fixed sum every pay check into a savings account, fourth could be a direct deposit into an education fund (if you are saving for college).
don't save to be a millionaire...almost every article or discussion ends up calculating how much someone should save at what age and how long and at what annual return to save up to a million. I have never understood the fancy for this target. Saving has a higher purpose than that. It is to provide for your needs when you need help. It is to provide you peace of mind that if things go south, you can depend on it. It is to allow you to buy things and have vacations or share gifts with your loved ones if you choose to do so.
Lastly...Saving is the same as dieting. Do not go overboard else you will lose interest or suddenly splurge on fatty items breaking the discipline and long term goal. Keep it steady and only to the point that you do not feel strangled in your own saving plan. The idea is to enjoy life continuously and be prepared...
control your spend...simply speaking, check and double check your monthly budget. There are must have "needs" like rent, insurance payments, grocery, fuel, utilities and there will be "wants" electronics, new clothes, eating out, movies etc. If Saving is not in the "needs", begin by listing it there and assigning a target $ value to it. The best way to save is to wisely spend and put off at least by 24 hours anything that is not on your budget list.
target $ value for saving...every one's economic scenario is different. Some have saved in the past so have something to fall back on, some have utilized it all in the downturn and some have yet to embrace this idea. Rule of thumb simply is "as much as you can". Yes, save the maximum you can every month till you have about 12 months of reserves. Reserves would be your monthly budget for all your "needs" times twelve. This would be a healthy number. Alternately if percentages are your thing, most recommendations are for 20% of your pre-tax income but at least 10% for sure. Getting to that reserve target will take time but the inner peace and confidence that it provides is awesome.
saving tricks...there are several methods people can adopt such that they save automatically which means the money is never with them in the first place to re-direct into a savings account post budgeting. One of them is directing a portion of your salary pre-tax directly into your 401k, second is to direct a portion of your salary into an IRA account, third could be to direct a fixed sum every pay check into a savings account, fourth could be a direct deposit into an education fund (if you are saving for college).
don't save to be a millionaire...almost every article or discussion ends up calculating how much someone should save at what age and how long and at what annual return to save up to a million. I have never understood the fancy for this target. Saving has a higher purpose than that. It is to provide for your needs when you need help. It is to provide you peace of mind that if things go south, you can depend on it. It is to allow you to buy things and have vacations or share gifts with your loved ones if you choose to do so.
Lastly...Saving is the same as dieting. Do not go overboard else you will lose interest or suddenly splurge on fatty items breaking the discipline and long term goal. Keep it steady and only to the point that you do not feel strangled in your own saving plan. The idea is to enjoy life continuously and be prepared...
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