You have learned to organize your present incoming with your current expenses. You have tipped the scale to work in your favor and have found a surplus. Too often, our ‘extra’ cash is wasted. Spent on ATM fees, the interest on your next card statement, or knick-knacks you buy as you go about your week.
The emotional trouble with saving is the decision to hold back spending because ‘you must shield yourself from enjoying life or indulging.’ And this is so difficult if we only think about it. Saving is a habit; you may put away $10 a week, some can save $100 or more a week. In either case, the driving force behind finding a huge lump sum after a week, months, or years, is the habit. And we are only talking in the short-term.
There is an easy way to get started with valuable Savings. Start with your emergency fund. Why? The emergency fund carries the cash that keeps you moving forward when “life” happens. A few examples are moving, career change, job loss, or sickness.
The design of the emergency fund is to have a specific amount of money at your disposal. As an example, sum your life costs for a month. Let’s say $1000. $4,000 will let you continue living for four months while you cope, re-adjust, or transition your life.
This account must have the following criteria (these can get you started):
– Will your account hold you over for 3, or 6 months?
– Assign an account to one expense, like rent, or total living expenses.
Do you remember why it is called an emergency fund? Be considerate and spend on vacations and personal gifts after you have met your saving quota.
TIP: Focus on getting started and not on researching where to bank. I recommend searching for a known online bank – it adds a buffer, and safety.
Now that you have an emergency fund ready and have topped it off move on to saving for what you want. You have mastered funneling your money, now aim it toward the future.
I want to leave you with a few questions to ask yourself; they will make the planning of anything you need to save for – easy as pie:
– What amount of money will keep me safe for 1, 2, or 3 months? Or, what amount of money do I need? (Set a goal to hit.)
– How much money can I afford to save every week or every-other week? (Set a doable-baby-step plan.)
– What exactly will this lump-sum be used toward? (Give purpose to your goal.)
– Can I keep this aside, and start other savings account for fun I want to have? (Dedication to your goal!)