The Art of Saving

Financing

You can just as easily become addicted to saving, as you can spending.  Trust me, I’ve been there.  It’s such a feeling of accomplishment when you watch your savings grow, and know it’s because of decisions and sacrifices you have made.  Don’t wonder where your money went…decide where it goes.

To reduce the art of saving down to its simplest form is to say: Live Beneath Your Means.  Write that down. Tattoo it on your hand.  Repeat it in the mirror every morning.  In order to do this, you’ll need to calculate your monthly income and your fixed expenses.  Whatever is left over after you subtract your expenses from your income is how much you can choose to either save or spend.  If you choose to spend the amount that is left, you’re not living beneath your means…and in fact, are most likely living ABOVE your means which translates into spending more than you earn.  When unexpected expenses arise, you don’t have the money to take care of them.

Living beneath your means is the state of knowing what is left over after you deduct your expenses from your pay, and choosing to stock a portion of that away before allotting yourself the rest for discretionary spending.  The benefits of this are infinite, but to name a few:

              Never have a cloud hanging over you while you wonder how to pay a bill.

              Have the ability to invest in assets that produce income for you.

              Become addicted, once you see how quickly your money adds up!

One of the most fun aspects of having a set spending budget is that when you get a raise…you can choose to have that extra money go directly into savings, because you’ve already shown yourself that you don’t need that money to live on.  You’ll look at a raise as a faster road to financial freedom, instead of an extra dinner out each week. 

Maybe you’re thinking…but Homegirl, after I subtract my fixed expenses from my income, there isn’t enough left to cover saving and discretionary spending.  Well here is where we get to the actual art of saving.  Here are three tips, and if you keep them in mind your savings journey is going to be off to a strong start:

1.       The Little Things Add Up.

It’s natural for us to subconsciously make a decision that costs slightly more than an alternate option, by deciding that the tiny difference doesn’t amount to anything substantial.  This is the habit that we need to overcome the most.  Next time you catch yourself doing this, take a moment to add up the total amount it costs you over time, not just in that one instance…and then imagine having that lumpsum in your pocket at the end of the year.

2.       Shop Around.

Not just for everyday items…but the big ticket recurring costs too.  Most people think because they’ve been with the same insurance company, dentist, etc. for a long time, that they are getting the best rate, but that’s rarely the case.  You could save hundreds of dollars every year, just by checking out some different serviced providers.

3.       Change Things Up.

All too often, people find themselves with monthly bills that are there just because they’ve always been there.  Maybe it’s your cable bill.  Maybe it’s your gym membership.  Really look at all these costs and decide if that money is serving you well, or if it would be better to not have cable and put that monthly payment into a savings account.  Start being intentional about what’s happening to your money, instead of allowing your hard-earned cash to drain out of your account each month just because it’s habitual.