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Master the Art of Saving
The news this past week was not rosy. "The Commerce Department reported that the nation's personal savings rate for all of 2006 was a negative 1 percent, the worst showing in 73 years. ...
The savings rate is computed by taking the amount of personal income left after taxes are paid, an amount known as disposable income and subtracting the amount of spending. Since the figure has dipped into negative territory, it means consumers are spending all of their disposable income and then some." (Reported by AP writer Martin Crutsinger)
"One simple difference between the philosophy of the rich and the poor is: the rich save/invest their money and spend what is left; the poor spend their money and save/invest what is left," said Jim Rohn.
Why are you saving? Savings provides you security and peace of mind for your future needs and financial independence. The trouble is that many of us want it NOW and can't see past our need for instant gratification. So we spend and spend to get and get. Our future looks bleak.
Does your money run out before the month? Do you know by how much? Knowledge is power. Grab a balance sheet and record your income and your expenses for several months. Place all your expenses under the microscope, including all those in the "miscellaneous" spur of the moment category. What conclusions do you reach? Where are the savings opportunities?
"Saving is much like the familiar story of the tortoise and the hare. Little by little we put a small amount away and slowly but surely we develop the kind of saving amounts we are looking for. Those who put away a lot and then spend it all on a big screen TV may end up with a TV but that is about it. In the end, the slow and sure saver ends up with real wealth and financial independence," said Jim Rohn
Five steps for savings success as defined by Chris Widener, motivational speaker and author are:
- Do it regularly. Set up a schedule which works for you; a little each week, more every two weeks, or a chunk once a month.
- Pay yourself first, before you pay any other bills. Put yourself at the top of the payee list. Set up an automatic withdrawal from your checking account into a savings account. Then you know Steps 1 and 2 are taken care of.
- Set a goal of saving enough to cover six months' worth of expenses or better yet, six months' salary. Every financial guru has their own guidelines. You know what you need so having a goal in sight will keep you motivated to stick to the schedule.
- Don't touch it. That's the difficult part. Of course, emergencies do occur, but do you really need to have all the greatest and the latest? Remember the peace of mind that will be yours as your savings grows.
- Once you have your savings set, then and only then move on to investing. Acquire your safety net first, and then invest for further growth.
It takes discipline to save money. It doesn't matter how much money you make. It's about living within your means and having the where-with-all to save/invest the rest. Your future will soon enough be your NOW.
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