There’s a famous line about finances that goes like this – the art is not in making money but how to keep it. It’s always easy to make money because money is everywhere for as long as you work hard and smart for it. But keeping it is harder and it takes time and discipline. You have to make smart financial decisions so you keep track and control of your money. Budgeting and sticking to your budget is crucial and finding ways to save money should be one of your biggest goals in life.
Here are some lessons about saving money that can inspire you and guide you towards your journey to financial freedom.
Rainy days and your dreams
These two things should be the reasons why you are saving. Saving for your dreams are for your future security, for your retirement and for your financial freedom. It is important to save for the future so you will never have to regret or worry about a lot of things especially when you are too old to be stressed in life. As you get older, you’ll live your remaining days with freedom and peace when you have enough savings.
Of course you don’t only save for the future but also for the “what ifs.” Don’t wait for something bad to happen before you realize the importance of saving for the rainy days. When you save for emergencies, it is important that your goal is to save at least 3 to 6 months of what you earn. Amidst all the uncertainties we are facing nowadays, being proactive in life will save us.
Setting priorities
Experts and pros in saving money have this concept of paying the bills first – the mortgage, electric bill, car insurance, car payment, etc. Then a part of what’s left goes to savings. It’s always better if your savings is at least 20% of your monthly earnings. If your savings will not satisfy the 20%, then you can adjust by decreasing your bills or your expenses. Make it a rule to save 20% or more and never ever break the rule.
Actually, when you pay your important bills first, you also practice saving because you avoid paying for late fees and other penalties. You also save time and effort because you avoid any hassle and inconvenience that may arise
Your savings must be based on your entire paycheck but your spending should be based on the money left over, that is what you live on.
For more tips on how to spend your earnings wisely thru a budget, check here.
Savings vs Investment
When money sits in a bank, it doesn’t earn much. But if you invest, it grows and multiplies. The downside of investments is that they aren’t always accessible and there are risks, depending on where you put it. But over many years, most investments are going to increase and that is savings multiplied. One tip here is not to put everything on investments, make sure that a part that can be withdrawn anytime if needed is left in your account.
Saving teaches us a lot of valuable life lessons. It helps us realize a lot of things in our daily lives. Yes, nothing is certain in this world but saving enough for the future, for important matters makes that uncertainty a little less worrisome. Savings somehow gives peace of mind, that whatever life may bring us, we can be sure we and our family always have something to depend on.