Successful Saving Starts with Making It a Priority
August 26, 2009

At a financial education workshop conducted by a member of the Essential Knowledge team, our representative met Shonda, a young woman who said she couldn’t ever save money.

Every time she saved an amount, said Shonda, she ended up having to spend that money on bills. She was certain that she would never be able to save anything for the future. She believed it, too. She had a whole list of reasons to support her belief. Even though she was sitting in a presentation titled “saving strategies,” she was there to prove it wasn’t possible. Our team hears this perspective often.

Spenders usually have great excuses. I even find myself believing them at first.  These arguments can be very convincing.

** I will save more when I get my debt paid off.

** I will start saving when I have money left over at the end of the month.

** I don’t make enough money.

Will there ever be extra money left over? Are you really motivated to pay off your debt to start saving?  For almost everyone there is always something that needs to be purchased or fixed. Putting saving at the end of the list means you might as well leave it off the list completely. It just becomes one of those wishes and dreams that you hope to get around to doing one day.

So what makes a successful saver?  Someone who has stopped putting energy into why saving can’t work and is focused on how to make it happen.

Successful savers know that saving must be a priority. Consider Lyndsey, who comes from a family of spenders. Her husband, on the other hand, comes from a family of strong savers. They went through our financial education program and discussed their shared saving goals. Now, when she feels like indulging in retail therapy, she reminds herself of their plans.

Save the excuses. That’s the best way to become a great saver. Stop justifying bad behavior, and make a change. Excuses interfere with our ability to accomplish any goal in life, including saving. Even before you go through the act of putting money into a savings account, you must decide that your desire to build your savings is stronger than your desire to spend.

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Start A Budget
July 7, 2009

At Essential Knowledge, we actually don’t use the word “budget”. We think spending plan is more appropriate. It seems less confining, and more empowering. Whichever term you use, the result is the same. A budget is a plan for your money. And the amount of money you have is not important  whether your bank account has millions of dollars or tens of dollars, having a workable solution for spending is critical.

How do I start? Well, you can’t know where you are going, unless you know where you have been. You can do this one of two ways … you can start tracking your expenses for thirty days; or, you can pull up your most recent bank history online, and do a thirty day review. Use this expense worksheet for free. List every expense in the right category. Total each category to see your total spending. You probably know the exact amount of your car payment and housing, but you will probably be surprised what you spent in other areas.

Does your income exceed your expenses? This seems like a silly question, but it is vital. If it does not exceed your expenses, then you are probably using credit to cover the difference. Your immediate goal should be to cut your expenses in order to cash flow each month.

If your income does exceed your expenses, then decide what you want to accomplish. Do you want to save more money? Do you want to be more disciplined each month? Are you starting a retirement account, or adding to one? Determine what you want to save each month, based on the goal.

Evaluate your spending. You will see some things that you absolutely need, such as food, healthcare, housing and transportation. You will also see things that you just wanted, such as 150 channels of digital cable. The key is to find what you really need, and compare that to what you really want. Obviously, you need to eat, and have a roof over your head. But, could you live somewhere less expensive, or take your lunch to work?

Start with the easy things. Accomplishing small steps is satisfying and will motivate you to do more.

Each month, look for ways to save money in your budget. You will be amazed what you can do, regardless of your monthly income. Check back with me, too, for other ways to save.