Saving money is not a matter of math. You will not save
money when you get that next raise. You will not save money when that car is
paid off. You will not save money when the kids are grown. You will only save
money when it becomes an emotional priority.
We all know we need to save, but most people don't save like they know they
need to save. Why? Because they have competing goals. The goal to save isn't a
high enough priority to delay that purchase of the pizza, DVD player, new
computer, or china cabinet. So we purchase, buy, consume all our dollars away
or, worse yet, go into debt to buy these things. That debt means monthly
payments that control our paychecks and make us say things like, "We just don't
make enough to save any money!" Wrong, wrong, wrong! We do make enough
to save money; we just aren't willing to quit spoiling ourselves with our little
projects or pleasures to have enough left to save. I don't care what you
make—you can save money. It just has to become a big enough priority to
If a doctor told you that your child was dying and could only be saved with a
$15,000 operation that your insurance would not cover and could only be
performed nine months from today, could you save $15,000? Yes! Of course you
could! You would sell things, you would stop any spending that wasn't required
to survive, and you would take two extra jobs. For that short nine months, you
would become a saving madman (or madwoman). You would give up virtually anything
to accomplish that $15,000 goal. Saving would become a priority.
The secret to saving? Focused emotion. The secret to saving
money is to make it a priority, and that is done only when you get some
healthy anger or fear and then focus that emotion on your personal decisions.
Harnessing that emotion will make you move yourself to the top of your creditor
list. Then ask yourself, "Which bill is the most important? After tithing, who
should I pay first this month?" The answer is you! Until you pay God first, then
yourself, then everyone and everything else, you will never save money.
The advertisers and marketing community are affecting our emotions every day
and taking every dollar we have by making us see our wants as needs. It is time
for this to stop! Emotions make great slaves, but they are lousy masters. No
matter how educated or sophisticated we are, if we are not saving all we should
be, we are being ruled by emotions, not harnessing them as financial planning
So whether you are saving for college tuition, a trip to the family reunion,
new school clothes for little Bobby or Sally, or anything else, start saving
now! It's never too late!
Saving money is one of those tasks that's so much easier said than done.
There's more to it than (although that part alone can be
challenging). How much money will you save, where will you put it, and how can
you make sure it stays there? Here's how to set realistic goals, keep your
spending in check, and get the most for your money.
. Simply calculating how much you spend each month on your debts
will illustrate that eliminating debt is the fastest way to free up money. Once
the money is freed from debt payment, it can easily be re-purposed to savings.
Plus, the sooner you pay off debt, the less interest you'll pay, and that money
can be saved instead.
Set savings goals.
For short-term goals, this is easy.
If you want to
, find out how
much it costs; if you want to
, determine how much of a down payment you’ll need. For long-term
goals, such as retirement, you’ll need to do a lot more planning (figuring out
how much money you’ll need to live comfortably for 20 or 30 years after you stop
working), and you’ll also need to figure out how
will help you achieve your goals.
Establish a time-frame
. For example:
"I want to be able to
two years from today." Set a particular date for accomplishing shorter-term
goals, and make sure the goal is attainable within that time period. If it’s not
attainable, you’ll just get discouraged.
Figure out how much you’ll have to save per week, per month, or per
paycheck to attain each of your savings goals
. Take each thing you want to
save for and figure out how much you need to start saving now. For most savings
goals, it’s best to save the same amount each period. For example, if you want
to put a $20,000 down payment on a home in 36 months (three years), you’ll need
to save about $550 per month every month. But if your paychecks amount to $1000,
it might not be a realistic goal, so adjust your time-frame until you come up
with an approachable amount.
Keep a record of your expenses.
What you save falls
between two activities and their difference: how much you make and how much you
spend. Since you have more control over how much you spend, it's wise to take a
critical look at your expenses. Write down everything you spend your money on
for a couple weeks or a month. Be as detailed as possible, and try not to leave
out small purchases. Assign each purchase or expenditure a category such as:
Rent, Car insurance, Car payments, Phone Bill, Cable Bill, Utilities, Gas, Food,
- Keep a small notebook with you at all times. Get in the habit of recording
every expense and saving the receipts.
- Sit down once a week with your small notebook and receipts. Record your
expenses in a larger notebook or a spreadsheet program.
- There are also many apps you can download to your phone that will help you
keep track of your expenses.
Take a good, hard look at your spending
records after a month or two have passed. You’ll probably be surprised when you
look back at your record of expenses: $30 on ice cream, $10 on parking tickets?
You’ll likely see some obvious cuts you can make. Depending on how much you need
to save, however, you may need to make some difficult decisions. Think about
your priorities, and make cuts you can live with. Calculate how much those cuts
will save you per year, and you'll be much more motivated to pinch
- Can you move to a less expensive apartment or house? Can you ?
- Can you , or ? If your family has multiple cars, can you bring it down to
- Can you get a better price on insurance? Call around and make sure you are
getting the best price you can. Consider taking a higher deductible, too.
- Shop the discount racks at clothing stores. Items on clearance are marked
down considerably and could save you 50% of the price.
- Can you drop a land line and either only use your cell phone or save money
by calling over the internet for free with services such as Skype?
- Can you live without cable or satellite TV?
- Can you cut down on your utility bills?
- Can you restrict eating out? Buy food in bulk? Start using coupons? Cook
more at home? You might be able to .
Reassess your savings goals
Subtract your expenses (the ones you can't live without) from your take-home
income (i.e. after taxes have been taken out). What is the difference? And does
it match up with your savings goals? Let's say you've decided you can definitely
get by on $150 per month, and your paychecks amount to $230 per month. That
leaves you with $80 to save. If there’s absolutely no way you can fit all your
savings goals into your budget, take a look at what you’re saving for and cut
the less important things or adjust the time-frame. Maybe you need to put off
buying a new car for another year, or maybe you don’t really need a big-screen
TV that badly
. Once you’ve
managed to balance your earnings with your savings goals and spending, write
down a budget so you’ll know each month or each paycheck how much you can spend
on any given thing or category of things. This is especially important for
expenses which tend to fluctuate, or which you know you're going to have a
particularly hard time restricting. (E.g. "I will only spend $30 a month on
Stop using credit cards
. Pay for
everything with cash or money orders. Don't even use checks. It's easier to
overspend when you're pulling from a bank or credit account because you don't
know exactly how much is in there. If you have cash, you can see your supply
running low. You can even bundle up the predetermined amount of cash allocated
for each expense with a label or keep separate jars for each expense (e.g. a
bundle/jar for coffee, another for gas, another for miscellaneous). As you pull
money from a jar for that particular expense, you'll see how much remains and
you'll also be reminded of your limit.
Open an interest-bearing savings
. It’s a lot easier to keep track of your savings if you have them
separate from your spending money. You can also usually get better interest on
savings accounts than on checking accounts (if you get interest on your checking
account at all). Consider higher-interest options such as CDs or money-market
accounts for longer savings goals.
Pay yourself first
. Savings should be your priority, so don’t
just say that you’ll save whatever is left over at the end of the month. Deposit
savings into an account (or your piggy-bank)
as soon as you get paid
easy, effective way to start saving is to simply deposit 10% of every check in a
savings account. If you get a check or sum of cash, say 710.68, move the decimal
point one place to the left and deposit that amount: 71.07. This works well and
requires little thought; over several years, you've a tidy sum in savings.
Don't get discouraged and don't give
up. You may not think you can become wealthy but to become a millionaire is
possible if you set up a aggressive savings plan and stick to it. You may be
surprised how much money you can put away for something far more enjoyable than
what you could buy with short term savings. Good things often take time and the
longer you save the more interest you will be making on your savings as well!
- Every time you go to buy something think of the thing you are saving for and
the rough percentage of your savings so far that the thing costs and quite often
you won't buy it.
- Always over-estimate your expenses and under-estimate your
- If you can afford to share things you have, from food to living space to
appliances, try to do so. What goes around comes around when it's between close
friends, soon enough, you'll find your friends doing the same, and everybody
- Take care of your possessions. In this way, you'll need to replace items
less. Also, don't replace items until it's absolutely necessary. For instance,
just because a motor in an electric toothbrush breaks doesn't mean it stops
functioning as a toothbrush. Continue to use it, and when ready go buy a new one
or check the warranty.
- Have a hobby? Match your funds. One important habit for saving is if you
have a hobby, such as model airplanes, scrap-booking, dirt biking, scuba diving,
etc., set a hard and fast rule that whatever you allow yourself to spend on your
hobby, you match those funds to your savings. For example, if you buy yourself a
$45 pair of riding gloves, another $45 goes to your savings. Serious about
saving? Try doubling your matched funds! These savings plans will do two things:
Save money regularly and quickly, and really show you how much you are spending
on your hobby, when it costs you twice as much.
- If you receive unexpected cash, put all or most of it into your savings, but
continue to set aside your regularly scheduled amount as well. You’ll reach your
savings goals sooner.
- Make purchases with paper money, not exact change, and always save the
change. Use a piggy bank or jar for your coins. Coins and change may look
insignificant but when accumulated over time they can help you save. Some banks
now offer free coin counting machines. When you redeem your coins, ask to be
paid by check so you won't be tempted to spend your new found cash.
- Most people can save something regardless of their income. Starting
to save a little will help build the habit of saving. Even saving as little as
$5 a month will teach you that you don't need as much money as you think.
- If you can't bring yourself to destroy all your credit cards, at least
freeze them. Put them in a container, fill it with water, and stick it in a
freezer. That way, if you feel the urge to use credit, you have to wait until
the ice melts, and during that time you may come to your senses and realize you
don't really need to buy what you wanted to buy.
- If you get paid about the same amount on a regular basis, it'll get easier
to budget your money over time. If you have a variable income, it'll be harder
to anticipate your expenses because you won't know when's the next time you'll
get paid. List your budget categories in order of importance and fulfill the
most important items first. Play it safe; assume it'll be a while before you get
- Use affirmations. For example, repeat this affirmation to yourself until it
sinks in: Debt is not an option.
- Enjoy the simple pleasures in life. During the Great Depression, people
still had fun, just not lavishly expensive fun. Children had soapbox derbies,
teenagers had dance contests, and everyone played Monopoly, did puzzles, read,
and listened to the radio. Get together to discuss philosophy or pray; play
poker or make crazy quilt pillows; play instruments and dance. In those days, it
took some imagination and ingenuity, but they had a lot of fun without hanging
out at the mall, and you can too. Many of the friendships and alliances formed
during the Great Depression on the basis of such activities stood the test of
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