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Saving for the Future
If you are reading this, no doubt you are wondering what the future holds for you, financially.
Interest rates are rising, rapidly, and we are being warned of more to come. The strain on household budgets is real and stressful. Some may be thinking the future is grim. It doesn't need to be; it can be full of promise and you can be debt free, cashed up and laughing - all the way to your end goal!
You have probably already launched into a program to pay off your debts. Great, that's step one on the road to financial freedom and security. Once your debts are paid, you can start saving for the future.
Retirement may seem a long way off, but we all know that time just flies by and before you know it, you'll be 67 (our new Australian official retirement age). It's crucial to expand your vision of who you are today to include who you want to be tomorrow.
Also, if you're worried about losing your job and being unable to pay your bills while you look for a new one, start saving into an emergency fund right now! No matter how tight the budget is, get into the habit of saving something every week or fortnight or pay day. By saving at least three, but preferably twelve months' worth of all your living expenses in an emergency fund, you will have the security you need.
The best way to save is to put money away on the same day every time you get paid, as regularly as clockwork.
But where do you find the money? Well, most of us can find money in a few different places:
1. Take the money you had previously been applying each month toward your debt and put exactly the same amount into an account earmarked for savings.
2. Keep careful track of your expenses for one month by going through all your receipts, credit card charges and ATM receipts. Make a list of categories in which you spend: rent or mortgage, utilities, transportation, healthcare, groceries, meals out, entertainment, clothes.
I know there are folk out there telling you that you don't need to track your expenses. Frankly they're lying to you, you do. And if they say they don't, again they are lying to you - even if it's just by checking their bank statements each week or month, they are tracking what they are spending. They may not be controlling their spending, but they are tracking it. So don't think you can get away without recording what you spend, and where, and on what and have an accurate idea of your finances.
Where can you cut back by $50 or $100 a month and save this money instead?
Get your hair cut every six weeks rather than every five ( at a very modest estimate of $25 per cut this is a saving of $200 a year) . Bring your lunch to work one day a week instead of eating out all five (allowing $15 per lunch, this one saves you at least $750 a year). And cut out just two coffees a week (doing this alone will save you at least $450 a year). You've already kept $1,400 in your bank account in a year - around 6 days wages.
When you realise how long you have to work to pay for something it puts it into perspective.
When you see how easy it is to redirect that money to savings, you see how easy it is to build savings, even when you think you can't.
3. Work overtime if you can, or find freelance work while you save for your emergency fund; it may be worth your while. Just be sure to save the extra money and not spend it.
As you build your Emergency Fund and/or your savings account, keep this money safe and sound and liquid in a money market account or a savings account with the highest possible interest. Yes, I know that's not as easy as it sounds, but banks are starting to lift interest rates on savings accounts. After you have your twelve months' emergency fund, you may want to save additional money in a secure place or even top up your superannuation.
Saving for the future is how you stay secure and pave the road to your dreams.
It may look impossible but it's not. I've lived through a disaster that lasted almost four years. I know what it's like to not have even five cents to spare at the end of the month. So when I say that you can find ways to save, I am speaking the truth, because I had to find them and use them to get out of debt and build our savings.
Please start saving now. Don’t wait. Just do it!
Interest rates are rising, rapidly, and we are being warned of more to come. The strain on household budgets is real and stressful. Some may be thinking the future is grim. It doesn't need to be; it can be full of promise and you can be debt free, cashed up and laughing - all the way to your end goal!
You have probably already launched into a program to pay off your debts. Great, that's step one on the road to financial freedom and security. Once your debts are paid, you can start saving for the future.
Retirement may seem a long way off, but we all know that time just flies by and before you know it, you'll be 67 (our new Australian official retirement age). It's crucial to expand your vision of who you are today to include who you want to be tomorrow.
Also, if you're worried about losing your job and being unable to pay your bills while you look for a new one, start saving into an emergency fund right now! No matter how tight the budget is, get into the habit of saving something every week or fortnight or pay day. By saving at least three, but preferably twelve months' worth of all your living expenses in an emergency fund, you will have the security you need.
The best way to save is to put money away on the same day every time you get paid, as regularly as clockwork.
But where do you find the money? Well, most of us can find money in a few different places:
1. Take the money you had previously been applying each month toward your debt and put exactly the same amount into an account earmarked for savings.
2. Keep careful track of your expenses for one month by going through all your receipts, credit card charges and ATM receipts. Make a list of categories in which you spend: rent or mortgage, utilities, transportation, healthcare, groceries, meals out, entertainment, clothes.
I know there are folk out there telling you that you don't need to track your expenses. Frankly they're lying to you, you do. And if they say they don't, again they are lying to you - even if it's just by checking their bank statements each week or month, they are tracking what they are spending. They may not be controlling their spending, but they are tracking it. So don't think you can get away without recording what you spend, and where, and on what and have an accurate idea of your finances.
Where can you cut back by $50 or $100 a month and save this money instead?
Get your hair cut every six weeks rather than every five ( at a very modest estimate of $25 per cut this is a saving of $200 a year) . Bring your lunch to work one day a week instead of eating out all five (allowing $15 per lunch, this one saves you at least $750 a year). And cut out just two coffees a week (doing this alone will save you at least $450 a year). You've already kept $1,400 in your bank account in a year - around 6 days wages.
When you realise how long you have to work to pay for something it puts it into perspective.
When you see how easy it is to redirect that money to savings, you see how easy it is to build savings, even when you think you can't.
3. Work overtime if you can, or find freelance work while you save for your emergency fund; it may be worth your while. Just be sure to save the extra money and not spend it.
As you build your Emergency Fund and/or your savings account, keep this money safe and sound and liquid in a money market account or a savings account with the highest possible interest. Yes, I know that's not as easy as it sounds, but banks are starting to lift interest rates on savings accounts. After you have your twelve months' emergency fund, you may want to save additional money in a secure place or even top up your superannuation.
Saving for the future is how you stay secure and pave the road to your dreams.
It may look impossible but it's not. I've lived through a disaster that lasted almost four years. I know what it's like to not have even five cents to spare at the end of the month. So when I say that you can find ways to save, I am speaking the truth, because I had to find them and use them to get out of debt and build our savings.
Please start saving now. Don’t wait. Just do it!