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7 Habits of Successful Savers
Are you a good saver?
Few of us save enough money to maintain a reasonable level of financial security. Many seniors are being forced back to work well into their golden years while middle-aged workers are facing having to work longer before retiring with less than they'd expected, mothers are forced back into the workforce when they'd really be full-time mothers, and families are going without necessities because they don't have the money to cover unexpected expenses. Adopting effective habits can make saving money considerably easier. A few small changes might be all you need to have a financially abundant future.
Saving is a slow process and it can take years to see impressive results. However, your habits dramatically influence your results over time. Consistent saving, even of small amounts, adds up over time to considerable sums.
Do you remember the Fidelity Fiduciary Bank song from Mary Poppins? It explains the power of compounding interest beautifully.
Few of us save enough money to maintain a reasonable level of financial security. Many seniors are being forced back to work well into their golden years while middle-aged workers are facing having to work longer before retiring with less than they'd expected, mothers are forced back into the workforce when they'd really be full-time mothers, and families are going without necessities because they don't have the money to cover unexpected expenses. Adopting effective habits can make saving money considerably easier. A few small changes might be all you need to have a financially abundant future.
Saving is a slow process and it can take years to see impressive results. However, your habits dramatically influence your results over time. Consistent saving, even of small amounts, adds up over time to considerable sums.
Do you remember the Fidelity Fiduciary Bank song from Mary Poppins? It explains the power of compounding interest beautifully.
"If you invest your tuppence
Wisely in the bank
Safe and sound
Soon that tuppence safely invested in the bank
Will compound
And you'll achieve that sense of conquest
As your affluence expands
In the hands
Of the directors
Who invest as propriety demands"
From "Mary Poppins"
Composed by Robert B. Sherman and Richard M. Sherman
Even if you start small, perhaps just $10 a week (we don't have tuppence any more), you'll be saving $520 a year plus interest.
Saving $520 a year over the average working life of 45 years gives you a nest egg of $23,400.
With the compounding power of even a moderate rate of interest you could easily have over $87,000! And all for regularly saving just $10 a week.
If you’d like to play with some figures to see the power of compounding interest visit Moneysmart. Enter in the amount you think you can save regularly and see how much you could have after a few years, it may inspire you to boost your saving.
There are a few things you can do to become a successful saver. Implement these habits and watch your savings grow.
1. Savers pay themselves first. Our instincts can steer us in unproductive directions. Many of us feel compelled to pay all of our bills first before saving. It’s nice to be out from under the mental burden of bills and other financial obligations. But there’s rarely anything left at the end of the month to put into savings.
Make a habit of saving a percentage of every dollar you earn or receive. Start with 2% if that’s all you can afford, but make an effort to increase the amount in the future. Avoid spending this money on anything else!
2. Savers save automatically. It’s much easier and more effective to simply have the money removed from your pay before you have the opportunity to spend it.
Most employers are willing to split your pay and send a portion to a separate account. This might be the easiest way to save.
3. Savers keep their spending in check. The less you spend, the easier it is to save. Go through your spending over the last month and determine if all your money was well spent. If it wasn’t, carefully monitor your spending next month. Think about how much your spending is costing you.
It’s reasonable to expect an annual return of 10% on your long-term investments (long term is more than five years). Every $100 spent today would be worth nearly $750 in 20 years if it had been invested. Spending $100 when you were 20 years old could cost you nearly $8,850 at 65 years of age.
4. Savers avoid debt. Trying to save while in debt is like walking up a hill and never getting to the top. Consumer debt is an obstacle to achieving any financial goal. If you’re unable to pay cash, you simply can’t afford it.
Unless it’s for something very important that needs to be paid for immediately in an emergency situation, avoid accumulating any unnecessary debt.
5. Savers have goals. Saving is easier if you have a clear picture of the reason you are saving. The objective of a comfortable retirement or sending your child to a private school can help maintain your focus.
6. Savers take regular measurements. You’ll find that most savers are very aware of how much money is in their accounts and how much they’ve saved and spent. They’re on top of their income and expenses.
7. Savers are financially responsible in general. They pay their bills on time. They know how much debt they’re carrying. They have an emergency fund for the future. Do you know anyone that saves well, and the rest of their finances are a mess? Take responsibility for all aspects of your financial life.
It’s possible to save enough money to secure your future and retirement on a modest or even low income. Having more effective saving habits enhances your results. With a few minor adjustments to your saving habits, you can watch your savings grow.
Our lives are the result of our habits so create habits that support your financial well-being.
Saving $520 a year over the average working life of 45 years gives you a nest egg of $23,400.
With the compounding power of even a moderate rate of interest you could easily have over $87,000! And all for regularly saving just $10 a week.
If you’d like to play with some figures to see the power of compounding interest visit Moneysmart. Enter in the amount you think you can save regularly and see how much you could have after a few years, it may inspire you to boost your saving.
There are a few things you can do to become a successful saver. Implement these habits and watch your savings grow.
1. Savers pay themselves first. Our instincts can steer us in unproductive directions. Many of us feel compelled to pay all of our bills first before saving. It’s nice to be out from under the mental burden of bills and other financial obligations. But there’s rarely anything left at the end of the month to put into savings.
Make a habit of saving a percentage of every dollar you earn or receive. Start with 2% if that’s all you can afford, but make an effort to increase the amount in the future. Avoid spending this money on anything else!
2. Savers save automatically. It’s much easier and more effective to simply have the money removed from your pay before you have the opportunity to spend it.
Most employers are willing to split your pay and send a portion to a separate account. This might be the easiest way to save.
3. Savers keep their spending in check. The less you spend, the easier it is to save. Go through your spending over the last month and determine if all your money was well spent. If it wasn’t, carefully monitor your spending next month. Think about how much your spending is costing you.
It’s reasonable to expect an annual return of 10% on your long-term investments (long term is more than five years). Every $100 spent today would be worth nearly $750 in 20 years if it had been invested. Spending $100 when you were 20 years old could cost you nearly $8,850 at 65 years of age.
4. Savers avoid debt. Trying to save while in debt is like walking up a hill and never getting to the top. Consumer debt is an obstacle to achieving any financial goal. If you’re unable to pay cash, you simply can’t afford it.
Unless it’s for something very important that needs to be paid for immediately in an emergency situation, avoid accumulating any unnecessary debt.
5. Savers have goals. Saving is easier if you have a clear picture of the reason you are saving. The objective of a comfortable retirement or sending your child to a private school can help maintain your focus.
6. Savers take regular measurements. You’ll find that most savers are very aware of how much money is in their accounts and how much they’ve saved and spent. They’re on top of their income and expenses.
7. Savers are financially responsible in general. They pay their bills on time. They know how much debt they’re carrying. They have an emergency fund for the future. Do you know anyone that saves well, and the rest of their finances are a mess? Take responsibility for all aspects of your financial life.
It’s possible to save enough money to secure your future and retirement on a modest or even low income. Having more effective saving habits enhances your results. With a few minor adjustments to your saving habits, you can watch your savings grow.
Our lives are the result of our habits so create habits that support your financial well-being.