Many people do not believe that savings are important. I was one of them and for the longest time it was the last item on my goals. But we all learn our lessons albeit late in life. Because the future is unpredictable, having a safety cushion becomes an absolute necessity for everyone. There are compelling reasons for getting on the saving-for-the-rainy-days track such as retirement, education, and natural disasters like flooding.
But how does one start preparing for that rainy day? With fixed monthly bills to pay, setting aside extra cash becomes a daunting task attainable only by self-discipline and determination.
First, assess spending habits by listing all expenses. This can be tedious (and I speak from experience) but it really pays off. For example, a tall latte costs $3.00. If consumed twice daily during a five-day workweek, that’ll be $30.00/week and in 52 weeks, that’s a whooping $1,560.00 spent on coffee alone. Cutting this expense in half will insure that four-digit cash in a savings account by the end of the year.
Next, create a realistic budget, categorizing each expense. For example, Transport category includes bus fare, gas, and toll fees. Groceries and eating out belongs to Food and Dining while clothes buying would be under Shopping.
Remember the discipline and determination? These two comes handy when making the monthly contribution to the new savings account. Because lifestyles are different for everyone, it is not possible to have an applicable formula for savings. Usually, income is divvied up with 60-65% towards “rent and other fixed costs,” 20% for “wants,” and 15% for savings.
Although credit cards could be helpful, it is also easy to become dependent on them particularly when cash is short and payday is a week away. Sinking into debt can quickly happen from this point on.
Saving what one can over time will help tremendously. I remember looking at my savings account at the time when all it contained was a sad two-digit figure. I decided to change the numbers; that was 15 years ago. It was not easy but the peace of mind I now enjoy is more than the interest any bank can offer.
Here’s a quote that is a constant reminder of the power of determination and sincerity:
When your determination changes, everything will begin to move in the direction you desire. The moment you resolve to be victorious, every nerve and fiber in your being will immediately orient itself toward your success. On the other hand, if you think, “This is never going to work out,” then at that instant every cell in your being will be deflated and give up the fight. Then everything will really move in the direction of failure (Daisaku Ikeda).