Building Financial Responsibility Through Saving
Let's assume you've taken your first steps toward financial security. You've learned how to budget
and how to plan
. Now, it's a good time to learn how to save. Saving is a responsibility and obligation that you owe to yourself and your family. Saving is also a necessity for a secure financial future.
You might be asking yourself, "How can I save money when I can barely make ends meet?" Believe it or not, this is a common reaction many people have when they are first approached with the idea of planning for their financial future. At first, saving may seem like a daunting task: Remember, though, the journey of a thousand miles begins with a single step.
Keep taking it one step at a time and make your own plans for the future starting now.
If you've been working on your financial goals for a while, you probably have your own spending plan (budget) and are making progress toward becoming debt-free. If you have yet to work out a spending plan, now is as good a time as any to start. To build financial responsibility and security you must first know how much money you have coming in and how much you have going out. The "going out" must include your own savings. Listing your savings as an expense like another bill is called paying yourself first.
In a perfect world you would ideally save a minimum of 10 percent of your gross pay. Unfortunately, we know this is not a perfect world. So 10 percent may be unrealistic for you, but the important point is to start with something.
If, after working out a spending plan, your total expenses exceed your total income, search for areas in which you can cut spending and/or increase your income. Ways to save include renting videos rather than going to the movies and eating out less by packing a lunch for work. Be creative in trying to find 10 percent that you can steer away from expenses and toward your savings account.
Here's a great way to do that. Make it easier to save by paying yourself first each time you get a paycheck. If possible, have a portion of your check deducted and put into a savings account before you even see it. By paying yourself first, you'll feel good that you are working for yourself instead of only working to pay bills. Don't get discouraged if, because of some emergency, you have to dip into your savings.
That is why people have savings---to provide financial security.
Also, if you have to skip a week of saving because of an unexpected bill, don't give up. Do your best to get back on track the following paycheck.
(make this a table)
ACCUMULATED SAVINGS EARNING 5 PERCENT / YEAR
Time 5 Years 10 Years 15 Years 20 Years 25 Years
$25 per month $1,707 $3,898 $6,710 $10,319 $14,950
$50 per month $3,414 $7,795 $13,420 $20,637 $29,899
This chart represents a hypothetical investment.
The amount you can afford to save may not seem like a lot at first. You may even think, "What's the use? This little bit will never add up to anything." You'd be wrong to think that. Just take a look at the above savings chart and see how the smallest amount-less than $1 a day-quickly adds up! And with just a little more savings--$1.65 per day-- you'll have nearly $30,000 after 25 years.
Saving is easier than it seems when you put your mind to it.
Think of your goals. Whatever they are, you will reach them sooner by starting to save now. Saving not only fulfills your responsibility to yourself and family, it helps build security and gives you peace of mind.