There are two kinds of savings. The first involves accumulating money and storing it – setting it aside to allow it to grow in value. This is what you are doing when you make regular deposits into a savings or money market account or when you buy and hold savings bonds. The importance of saving cannot be stressed too much. It is critical that you develop the habit of saving regularly if you are going to improve your financial situation.
“Pay yourself first.” This means setting aside a regular amount out of every paycheck before you pay any other bills. Now obviously this is difficult to do if you are struggling every month just to pay your regular household bills.
But with planning, discipline and some extra effort, it is possible. You may have to begin with a smaller percentage, or you may have to start with every other check. You can even start with $10 (or $5 or even $1 and the change in your pocket) in a jar or envelope. Label it with a goal or dream that you’d like to save up for, and then add some change every week, or even every day but don’t touch the money until you have added enough to open a savings account. The most important thing is to start right away and to be consistent.
The second kind of saving actually involves spending. Everybody has seen commercials that promise huge ‘savings’ on virtually any kind of product or service you can imagine. This kind of saving actually means spending less than you would have if you made a purchase at a different time or place. This is what you are doing when you use coupons and rebates, buy bulk items at reduced prices or shop at sales or second hand stores. There are literally hundreds of ways to save money and reduce expenses.
Both types of saving are very important tools to use in your quest to improve your finances. You can begin right away to get more out of what you already have by being more effective and efficient in the way you use the resources that you have.
This post is taken from my upcoming e-book “Poor Folks Guide to Wealth Creation” which will be available soon on Vanessa’s Desk.