Finances

The Three Essentials: Part One – Saving

The Three Essentials: #1 – Saving

Imagine with me. It’s cool outside. You feel the crisp air of fall settling in. A leaf falls onto the windshield of your car and you know that the impending cold winter is around the corner. You’ve enjoyed the sweet summer warmth. You’re not quite ready for what’s ahead.  What do you do?

As I’ve shared in the “Dreams, Goals, Plans, Actions = Reality” post, having a goal can be a total motivator. When you’ve got something in mind that you really want, you’re willing to work hard until you achieve it.

Maybe you’re one of the many that crave the southern sun in the middle of winter. You’re desperate for the natural vitamin D to soak into your pores. But you consider it a nice dream because you know you don’t have the money for it. Have you ever heard the saying, “if there’s a will there’s a way”?

Introducing your most powerful wealth building tool: saving! You might be thinking, “well now, there’s a new concept”. Hear me out.

When you learn the discipline of saving, you can achieve what you want without racking up more debt. If you want to take a winter vacation, learn how to start saving for it earlier rather than trying to scrounge money together when winter hits.

Michael and I like the jar system. Go to the Dollar Store, get a mason jar, and put a label “vacation” on the front of it. Make sure that you rearrange your budget to fit this in if it is a priority for you. Remember that you might have to cut something else out of your budget to make it work, so be smart about this. Then, when each pay comes around, put $150 in the jar. You could start this in March (Hey, that’s this month!). By the time the end of December rolls around, you could have $3,000 saved for vacation. Then you can enjoy a nice cruise or resort worry free because you saved for it.

$150 can be a large number each pay. If that’s the case, either plan for a road trip down south for half the cost, or, save up for two years.

This is only one scenario. You could apply this to saving for appliances, since we all know they aren’t built to last anymore. You could save for a car, tuition, a house, retirement, etc. Saving for little things teaches you to save for the big things as well.

The greater investment starts to build when you can save three to six months worth of expenses. If you’re doing a budget, calculate your average expenses for three to six months. This will give you your goal to save towards. The reward in this is peace of mind. If you lose a job, become ill, or any other larger emergency creeps up, you won’t have to stress. You’ll have the money to see you through for some time.

When you achieve that goal, then you can really start thinking about investing. You can save for larger items like a car or tuition and actually pay cash for it. You can put a large down payment on a house and have a much smaller mortgage.

The possibilities are endless when saving is involved. It gives you grounding. It makes goals fun and achievable. It frees rewarding to watch your money climb rather than disappear. It gives you control.

What goals are you trying to achieve? Are you seeing progress towards saving for something you’d really like?

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