Many people aim to save money. This article in the 'Budgets How-To' Series explains that not all savings are alike, though!
Savings are high on most people's financial wish list. How about yours?
My question to you: What are you saving for?
You should have a clear, concise answer ready to this question. If not, then you may find you're also having trouble accumulating or holding on to any savings.
A clear goal will give you clear results.
Before we go any further, let me share a quick definition:
When we talk about SAVINGS with clients, we're referring to their WEALTH CREATION FUND.
A lot of people talk about savings, but really mean an emergency fund for any unforeseen expenses. They then often decide at some stage that a holiday, new entertainment system or other luxury expense fits this 'unforeseen expense' category.
The savings usually end up going up in smoke & they're right back where they started!
No need to stand there looking guilty, staring at your shoe laces,.We've all done it.
We're here to talk about how to get you to your financial goals as quickly & painlessly as possible. So we need to plead 'guilty as charged' and learn from it.
First ask: "Do I want to create wealth for myself?"
If, like most people you jump on the nearest desk & yell "Hell, Yes!", then let's set you a high priority goal to accumulate savings for wealth creation.
Then ask: "What else do I want?"
A whole list of thing will come up. These are usually shorter term goals and are often in the luxuries category.
Now, there is nothing wrong with luxuries. In fact, it's very important to enjoy some rewards on the way to your long-term goal!
However, don't be a fool and go mixing up 'saving' with 'saving up for big-ticket items'. One is for your financial security. The other is for fun & self indulging.
Make a list of these luxury items. Try to group them & list them in order of priority. Holidays, birthday parties & an emergency expense fund are important to most people.
I suggest you put a separate entry for each of these into your budget template. A good budget template will let you see the annualised amount for each expense.
This is really useful for planning purposes (eg if you'd like to manage an annual ski trip, you'll have an idea of how much it costs and can break it down into weekly savings needed towards it).
It's also useful for a 'reality check'. See how much that monthly day spa visit adds up to over the course of a year. You might decide to substitute it with a soak in the tub at home by candle light, enjoying your favourite take-away and a good movie afterwards.
The secrets of good 'Budgets How-To' practices is that it's all about making good choices. Every day we make choices which affect our financial future.
The more you can automate your budget system, the less opportunities you'll have to stray from the plan.
Automation is key to your budgets how-to success. Before you automate, though be sure you know what savings plan it is you're setting in place!
Have a most prosperous day!
Miriam
Miriam Castilla's passion is teaching people how to be money smart.
Discover a quick & easy system which puts an end to financial stress, starts saving your money and run your budget on auto pilot.
Download your Free Budget Template & learn How To Be Money Smart here.
Be sure to visit the Budgets How-To Blog for lots of juicy budgeting & saving tips!
Here's to YOUR Financial Success!
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