“Find $50 a month for savings. No excuses!” – Suze Orman
While I tend to aim to save more than $50 a month, I prefer to use a percentage based off monthly earnings, it’s vital to have a good attitude towards financial savings. You’re not only preparing for the worst, you’re also building for the future.
Why is saving so important? Well aside from the obvious benefits of being protected should things turn sour, saving builds a more routine spending structure. As you get used to saving money each month, you’ll begin to notice that you aren’t spending as recklessly and that you’re seeking out cheaper deals/offers. This doesn’t mean you’re becoming a “cheap” person, you are just becoming more aware of where your money is going and why.
The two main perspectives on financial savings were pointed out to me by Jim Rohn. Although simple, I hadn’t quite realised the truth until he put it into words:
“Poor people spend their money and save what’s left. Rich people save their money and spend what’s left.”
A slight change in perspective can make all the difference in financial planning. If two people earn £1000 a month and person A saves 20% a month and spends the rest, while person B spends and saves whats left, it can lead to two very different outcomes. Over a one year period, person A would have consistently saved and amassed £2400 of savings. While on the other hand, person B might save £100 in the first month, £300 in the second month, nothing at all in the third month etc. and they would most likely have ended up saving a lot less.
I’m not trying to tell you how you should save, I’m just trying to demonstrate and emphasise how important it is to have some sort of savings plan in place. For example my very simple plan is to save 30% of my monthly salary and have the rest for spending. Whatever I don’t spend of the remaining 70%, I transfer to my savings! This means I start each month on a clean slate and that some months I might end up saving 50%, but if I spend it all by pay day I’m safe with the fact that I had saved 30%.
To summarise, your attitudes to savings and financial planning can reflect the lifestyle you will live in the future. Although you don’t have to start amounting masses of savings quickly, it’s very beneficial to start getting into the routine of saving, how ever small, each month.