In today’s consumerist economy, most people come to spend more than their income. Savings are often an ignored concept. If you ask anyone why they are not saving, the answer would be ‘How can I, when I don’t make enough to sustain myself?’ and this is why they never save. Rather they end up paying inflated interest rates on credit cards, further depleting their not-so-sufficient income.
Why is saving money so important?
Recession has really shown us what comes from being reckless with your money. We have people who are losing their homes and pensions just because their lifestyle didn’t match their real possibilities. We should have ALL learned a lesson. Having an ‘egg nest’ for the ‘rainy days’ is ALWAYS a better idea than going from month to month with zero savings and future planning.
Imagine this scene: you lose your job, the economy is in recession and you have a number of EMIs to pay for various consumer products and credit card bills. What happens in such a case? Your credit score will plunge to rock bottom; you lose you your financial credibility which will take you years to build again. Besides, you will have to drastically readjust your lifestyle to manage with whatever income you would be able to scratch through.
It has and it WILL happen again. Let’s make sure it’s not you.
The only thing that will save you from such terrible situations is a savings account. Ideally you should have put aside enough money to keep you going in your present style of living for 6-12 months. Of course, if it is more than that it would not hurt you; but the minimum should be a six month funds cushion that will cover all your expenses without compromises.
But how can you still save money, even when your income is not that big?
When you have a small wage, you cannot save too much, BUT YOU CAN STILL SAVE. Even 100 bucks that goes into your savings account is better than nothing. So the excuse with ‘I don’t make enough’ doesn’t ‘fly’.
Here are three priceless tricks that would ensure you would always be able to save money – no matter what.
1. Pay yourself first
NEVER leave bills unpaid. This carries interest and you’ll pay for everything. Make sure you pay the bills, but also PAY YOURSELF. If you solved this month’s payments, set money aside. Before you pay for leisure, food and others. At least 5% of your income should go into that account. Try make it 10% or more, if you can. When you have a ‘bad month’, try to settle for 5%, the moment you have more money, PUT MORE INTO SAVINGS.
2. Make the best choices for savings
See which banks offer a better interest for your savings. See which bank is offering more for your money. Always be on the look for better deals. It’s YOUR money, don’t be reckless with the ones that are keeping it safe. If yo
3. Know an emergency from a non-emergency
No, buying a brand new plasma TV IS NOT an emergency. Nor a trip to Hawaii. When you’re not doing well financially, try to lower your lifestyle expectations. Remember that, once you lose your job, your TV is not good for eating. Trust me on this one. But having the money saved, can help your family through those VERY rough months. Otherwise you’ll keep on sinking …
In my family we’ve gone through some very hard times. And we spent money like crazy and, when problems came, had to borrow money from friends. We’ll never do this again. Instead of spending as we used to, we have now various savings accounts for any emergencies and buy something only when we really can afford it.
Let’s make it as a New Year’s Resolution to be more careful with our money and learn to save better. It will help US on the long run.