Saving Money

An Excerpt from the book PERSONAL MONEY MANAGEMENT

Just about everyone agrees that they should be saving part of what they earn. But many fail to do so. They feel that the cost of living is too high, there are too many bills to pay, too many things they need to buy.

All of which may be true. But the simple fact remains that, no matter who you are or what your income is, you can save. First you have to decide that you want to save some of your money more than you want to spend it. Next you have to decide how much you can realistically put aside.

THE MISTAKE MILLIONS MAKE

Many people make the mistake of believing that if they can't save a lot of money, it isn't worth doing. They overlook the fact that even small amounts saved regularly will add up over a period of time. Suppose you saved just five percent of your income. You would save a full year's salary in less than 20 years (actually quite a few years less because of the interest it would earn in a savings account). If that seems like a long time, remember we're talking about a full year's income! How much less time would it take you to save $1,000 or $500?

By comparison, what will you have to show for the money you didn't save? Look back over the last few years and ask yourself what you would have missed if you had saved five or ten percent of your income. Anything tangible or really worthwhile? Anything that would give you as much satisfaction as having that money in a savings account right now? Probably not.

Breaking the habit of spending all you make takes will power. But, as your savings grow, little by little, it becomes easier and easier. In fact, it becomes a pleasure. And, as you add to your savings, you'll also be receiving interest that will help your savings grow even faster.

Isn't it true that the things you really want most can only come through savings? Take a moment and make a mental list of the things worth saving for. Is there any sense in dreaming of a sudden windfall, an inheritance, or some other source of instant wealth? Of course not. You know what you have to do--start saving.

A FORMULA FOR SAVING MONEY

The formula is just three words: "PAY YOURSELF FIRST." Before you pay the landlord or the grocer or anyone else, pay yourself--FIRST.

The theory is simple. If you try to save what is left after paying all of your bills and meeting your other expenses, you'll wind up saving nothing for yourself. If, on the other hand, you pay yourself first, you'll become a little wealthier every month, and you'll still meet necessary expenses with the rest of your income (even if you have to manage your money better to do it.)

If you don't believe it is possible, consider the following. Suppose Congress increased everyone's income tax by ten percent. No one would like it, but everyone would find their paycheck reduced by the extra withholding. After a short period of adjustment, you would pare your expenses so that you were living on less take-home pay. You would have to because the extra money just wouldn't be there anymore.

Paying yourself first works the same way. If you put a certain amount of each paycheck into a savings account before you spend a dime, you "withhold" for yourself. You'll soon adjust your cost of living to what is available to spend. Try it with ten percent of your income--or just five percent. You'll be surprised to find out that saving doesn't reduce your standard of living. On the contrary, it improves it. You just can't go broke when you're saving money.

TRICKS TO BUILD YOUR SAVINGS ACCOUNT

Here are some ideas that will help you save. These tricks have worked for all kinds of people. Don't try them all.

1. Save coins of a designated amount, such as dimes or quarters, from your daily change. Put all such coins into a piggy bank. You won't miss them and you'll be surprised how they'll add up.
2. Instead of saving just certain coins, save all of your loose change every day.
3. After you've paid the last installment on your car or other loan, add to your savings account the same amount you've been paying. You're already in the habit of setting aside that amount every month, so continue to pay it to yourself.
4. If you get an income tax refund, deposit it in your saving account.
5. If you receive a cash bonus, use it to open a saving account or to fatten an existing one.
6. Save your overtime pay instead of spending it.
7. When you get a raise, save it. You got along without it before. Even a small weekly increase will add up.
8. Put gifts of money received for birthdays, at Christmas, or for other special occasions into your savings account.
9. Be sure all your money is working for you. Deposit extra sums of cash immediately.
10. Adopt a short-term "austerity" program during which you save as much as possible. Buy nothing unless your really need it. Cut out movies, eating out, entertaining or other expenses and deposit what you save.

YOU'LL GAIN IN EVERY WAY

Not only will saving make you wealthier, you'll have a greater peace of mind because you'll be more financially secure. You'll have new respect for yourself. You'll find that your entire living pattern becomes better organized. What's more, you'll be on the road to becoming a financial success.

WHAT IS FINANCIAL SUCCESS?

Financial success is simple. It is the ability to accumulate money and receive a return on what you save. It is not what you spend or how much you earn that determines your success with money. It is how much you keep!

HOW DO YOU ACHIEVE FINANCIAL SUCCESS?

First, take an inventory to learn where you stand financially. How much do you earn? Where does your money go? How much do you owe? How much have you saved? Only by doing this can you determine your true financial position.

Second, set a goal. decide how much money you want and when you want to reach your goal. For example, let's say you want to have $5,000 saved in five years. Put this goal in writing. Now you have committed yourself to a definite objective.

Once you've created this goal, use every means in your power to achieve it. As you work toward it, you'll receive the thrill and satisfaction of a job well done. You'll be managing your own affairs. You will have earned a feeling of independence that nothing can take away from you.

Many people say they find it impossible to save any money because they have too many places where they must spend their income. Even these people can save if they really want to. The most important factory in saving is a burning desire to succeed with your money. You must decide you want to save more than you want to spend.

TO SAVE BETTER YOU ALSO HAVE TO SPEND BETTER

People who have learned the secret of saving usually have also learned to spend better. They work from a definite money management plan that keeps expenses under control, that makes every dollar serve a purpose. If these ideas don't seem to work for you--if, after paying yourself first, you wind up in the hole and have to borrow back what you've saved--go back to the basics of a sound financial plan. You'll find there are plenty of leaks in your budget that can be plugged so that you won't constantly be needing the money you've just saved.

IT CAN BE DONE!

Others have done it. You can do it too! If you're really determined to succeed at saving money, you'll do it.

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