Saving Money - The Magic 20 Percent
By Emmanuel Mendonca |
Saving money is not easy and is made more difficult if you have a short-term
outlook regarding your personal finances. If, like many people, you are living
from one pay cheque to the next, it is difficult to put some money aside for a
rainy day or for a summer holiday. But what if you were to change your financial
outlook into a medium to long-term one? You might believe that you cannot afford
to think ahead and make plans, but in most cases you would be wrong. Most people
should be able to save some money and with some effort, maybe even as much as 20
percent of their salary each month.
Income
Analysis
First of all it is important to have a handle on where
your income is going. Unless, we are on an extremely tight budget or are very
money conscious for other reasons, many of us have never really sat down and
considered what our money is being spent on – we just know that by the end of
the month, it has all gone! You will know if you are consistently spending your
money on unnecessary purchases, for example. Having this knowledge equips you
with the control to change things a little or a lot.
Saving Money
Mentality
Many people have never been taught to save and as
children, immediately spent the money they received without any forethought. You
often hear people say, “Life is short, if you want something buy it now”, but
thankfully for most of us life is not really so short and along the way we will
have to deal with both opportunities and challenges. Having some money saved
will help you make the most of the opportunities and ride the challenges.
Savings – Seeing the Big Picture
If you could
save 20 percent of your salary each month, imagine what that would mean in real
financial terms. For example, if you earn 2000 dollars per month and you saved
20 percent or 400 dollars out of every pay cheque, after 12 months you will have
saved 4800 dollars! Regularly saving this amount of money would give you the
financial freedom to take advantage of more of life’s opportunities. You could
plan the special holiday you have always wanted to go on, buy the car that you
have been dreaming about for years, or help put a child through college. When it
comes to life’s challenges, having a lump sum put away could help you pay for
private medical care or deal with an expensive plumbing problem in the home, all
without having to turn to the bank for a loan and getting into debt.
How Can it Be Done?
As we have already seen,
knowing exactly where your money is going is the starting point. Next, start
thinking about the big things you could achieve with some money in the bank.
Some people compensate themselves for not having what they really want, by
making many frequent small purchases and getting a temporary “feel good”
sensation afterwards. Rather than satisfying yourself with small purchases, such
as new clothes and CDs every week or always buying the latest mobile phone,
think about how much more satisfying it would be to save up and buy or do
something special, which you previously thought was out of your reach, but is
achievable with a little effort.
About the
Author
Emmanuel Mendonca is the webmaster and publisher of
Debt Genius at http://www.debtgenius.com - a free source of information and advice on debt consolidation, getting
out of debt and on saving money.
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