One of the major reasons why so many people have too much debt, is that they don’t have any savings. You need savings to help you in an emergency and to secure your and your family’s future.You can do three things with your money: spend it, save it, and/or invest it. Unfortunately, most of us only spend our money. To be financially healthy, you have to save and invest as well.
Financial experts say that we should all save at least 10% of our annual income and that we should have three months’ salary set aside in case we lose our jobs or have unexpected expenses.
These targets may seem impossible right now, but they are something to aim for. Remember, any savings you have will give you more security and more options than no savings at all.
Saving is something we all should do because it:
- Gives you a money cushion in emergencies.
- Gives you peace of mind.
- Prepares you for retirement.
- Helps you to achieve your life goals.
- Helps you to secure your children’s future.
- Allows you to afford the things you need and want.
- Allows you to have fun by paying for things like holidays.
Where do I start?
Your first priority should be to pay off your debt so that you don’t end up paying a lot of interest. As your debt becomes paid up, you can put the money that is available into a savings account.
Here are more tips to help you start saving:
- Draw up and stick to your budget using Bayport’s simple budget calculator.
- Keep track of your expenses. People who keep track of their expenses often have more money left over at the end of the month than people who spend without a plan.
- Pay yourself first. Set up a debit order that puts money in your savings account first on payday.
- Don’t buy on impulse. Take the money you might have spent on a snack or a drink and put it in a savings jar.
- Instead of buying lottery tickets, put money in your savings jar.
- Give up expensive habits such as smoking, drinking or gambling.
- Tell you family and friends about your plans so that they can support you.
- Grow your own fruit and vegetables if you have a garden.
- Follow a weekly plan such as a 52-week savings plan
Once you start saving, your money will start working for you. This is thanks to compound interest. Compound interest means that the interest earned on your money is added to the saved amount and then interest is calculated on the higher amount. In this way your money grows while your monthly savings amount stays the same. You should therefore start saving as early as possible so that compound interest has a long time to work hard for you.