Saving money is one of the key components of learning how to manage money, prevent unmanageable debt, and guaranteeing a sound financial future. Even though saving money is just as important as spending it, maybe more so, far too many people don’t have any sort of savings at all. Let’s take a look at what saving money is all about.
Have you ever noticed that “budgeting” involves determining how much money you have to put into a savings account, retirement fund, or other investment? This is because saving money is a HUGE part of good money management. The individual who has no savings is an individual who is just asking for trouble – maybe not now, but somewhere down the road.
A lot of people insist they can’t save money because they either don’t earn enough money to begin with or because they are so financially overextended that they don’t have anything extra to put aside for a rainy day. But, this type of thinking is the first mistake non-savers make.
Think of saving money not as just something you do for a rainy day, but something that you do as a necessary part of money management. If you view saving money as essential to your financial future, then you are less likely to view it as some sort of budgetary “extra.”
Everyone can save money, even those people who don’t make a lot to begin with. It’s just a matter of rebalancing your priorities. If you smoke, quit. Put that money into a savings account. If you like that morning latte, stop. Watch your savings grow by putting those couple of dollars a day into an interest-bearing checking account. You can even find a few extra pennies by opting to refuel at a discount gas station rather than just what’s convenient. Stop eating out. Cook at home and save the difference. Every little bit really does help.
Even though regular interest-bearing savings accounts don’t pay much these days, the bank is still the safest place to keep your money. Once you have enough in savings, you can look into investment options like CDs (Certificates of Deposit) that pay more.
Until then, look at savings as a sort of goal. Open an account and set a goal of… say… five dollars a week. Once you discover that you don’t miss that five dollars, increase it to ten dollars a week. You’ll love watching your savings grow.
You should have one account that is a savings account for savings sake. This means that the money is not earmarked for anything other than to support your financial future. You can also open up an account to save for college, a house, a car, or any other large purchase. Opening up a separate account for big-ticket items will prevent you from draining your main savings to buy something. Look at your main savings account as a deposit account only, and open other accounts for goal-oriented savings.