Get Started Saving Today

Saving money is one of the most difficult things to buckle down and do, yet it is also one of the most important things you can do for yourself and your family. There is nothing like the peace of mind that comes along with knowing that you can survive a six month recovery from an injury, or job hunt following an unexpected layoff, without too much discomfort. Maybe you also have your eye set on a vacation next year, a new car, or want to remodel your kitchen, well short term saving is an excellent way to realize these goals without killing yourself with high interest payments.

Before we get to it, just a little advice for whatever it’s worth. Prior to beginning to save pay off your credit card debt, and then proceed to cut those evil little blood suckers up. It is the only thing that I find more important than saving up money. The simple reason being if you begin saving money while making minimum or almost minimum payments on your credit cards all of those funds you have stored up will be nothing compared to the interest you have paid to the credit card companies.

Decide what you are saving for

Besides the general emergency fund, you may have other savings goals. This is generally retirement and what I like to call “Big Buys” (future vacation, car, cosmetic surgery, etc.)

Calculate your monthly living expenses

• Bills (Mortgage/Rent, Car Payment, Insurance, Utilities, Cell Phone, Internet/Cable, and so on)
• Necessities (Food, Gas, Clothing, anything else that isn’t a bill but needed to survive)

This is also a good time to identify anything you can cut out, or that you may be spending too much on (Do you need 900 channels on T.V. when you only watch 3?)

• Deduct this amount from your monthly income and Viola you have what they call your disposable income. (I never cared for this term, toilet paper is disposable money is not)

Allocate the leftover money

• The largest chunk of this money should be allocated to the “Emergency Fund”; this money should be saved up as quickly as possible. There is no telling when an emergency will strike.
• The “BIG Buy Fund”
• Retirement
• “Play Money” (If we don’t have some fun then what is the point?)

Divide this figure up between your different savings goals as you wish, everyone will strike a different balance. Once you have these numbers down stick to them, treat them as a bill, put the money away and forget that it exists. Remember that many employers who offer direct deposit will also take a predetermined amount of your salary and deposit it into different savings accounts. It is much easier to forget about money you didn’t see in the first place. Or you can set up an automatic transfer from your checking account at the beginning or end of each month. Give yourself no choice in the matter by taking it out of your hands.