How to Pick Savings and Why


Isn’t buying on credit fun and easy? You see something you like, pull out the plastic and it’s yours! No fumbling for cash, no worrying about how or when it’ll be paid. You just take out your card and buy on impulse. Well, it’s fun until you finally get the credit card bill and notice that astronomical interest rate. Sure,
19% doesn’t sound like much, but when those charges pile up it then becomes apparent what the costs are of overspending. A number of Americans over the last 20 to 30 years have lived vicariously through their credit cards. However, like most Americans in your position you know it must end. Saving money is no longer the exception to the rule, but the only rule. You’ve likely decided to end your spending ways and concentrate on saving for the future. Perhaps you’ve decided that your retirement need some growth or just want to make sure you have money available for a rainy day. Whatever the incentive, it’s the right decision. Putting an end to the spending habits is the first step. Now you must move forward and start saving. So, where to begin?

Understand Budgeting Principles

Most people just can’t reconcile their take home pay with where or how they spend their money. There are mortgage payments, car payments, groceries bills, electricity, heating and a whole myriad of other monthly payments. People get paid and then find they have nothing left. However, the problem is often how people envision budgets and how they adopt them in their households. Budgeting is not meant to take an amount and spent it until it’s gone. Essential budgeting principles mean that people must find ways to save first and use what’s left to make those payments. Typically people will get paid, make their monthly payments, and in the process find ways to spend what’s left over. This is entirely the wrong approach and there are a couple of simple and straightforward approaches to improve both family and personal budgets. What are these approaches and how do they work?

• Pay Yourself First!

The easiest way to save is to not intentionally save at all. What does this mean? Simply put, the best savers make it a point to immediately pay themselves first. It’s an approach that’s easy to comprehend and simple in its effectiveness. On each payday, have an amount immediately deducted from your pay and placed in a savings account. Start small if need be, but start with something. This is the essence of paying yourself first and it’s used by a number of people who save for both retirement and for that aforementioned rainy day. Savings takes time and gradually you’ll not even notice the amount is missing. Most people who adopt this approach start off with small amounts and increase them over time.

• Make Simple Choices

Another important aspect of successful savings is to make some simple choices about where and how you spend your money. To make this simple, look at your spending habits during a given week. Track how much you spend and where. For instance, how many times a week do you eat out for lunch and how much do you spend each time? How many times do you eat out for dinner each week with the family? How many times do you stop at your favorite coffee shop in the morning on your way to work? Most people rarely think these little purchases add up, but they do. In fact, it’s those little purchases where most people save tremendous amounts of money. People who save aren’t cheap, they’re smart. Saving money on these small items will make a difference and will allow you to increase your “pay yourself first” amount.

Most people think saving money is difficult and sometimes not worth the effort. However, even the smallest amount is better than nothing. Make sure to pay yourself first. Next, track your spending habits and start to make simple choices about what you can do without. Over time it will become much easier to save and you’ll start to ask yourself why you didn’t started sooner.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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