How to Start Saving Money Now

Have you ever heard the saying, “saving for a rainy day?” Most people are familiar with the phrase but few actually put this wise quote into practice. A common misconception surrounding saving money is that there is nothing fun about it. Many people tend to equate saving their hard-earned dollars with giving up something or not being able to buy the things they want. For some, this mentality includes things like a new car, a new home, traveling, and other discretionary purchases. Let’s be honest. Saving money isn’t easy. All you have to do is look at the government to see that trillions of dollars are spent every year without any effort to put anything back into the budget.

How Much Money Should You Be Saving?

The National Foundation for Credit Counseling’s 2011 financial group did a recent survey that said:

“About a third of those polled said they put away nada for retirement, another third save 1% to 10%, and just under a quarter save more than 10%. (The rest said they didn’t know how much they set aside or refused to answer.)”

Are you saving enough money right now? How much should you be saving? Well, there is really no right or wrong answer. People have their own opinions as to what you should be saving. Elizabeth Warren has a “Balanced Money Formula” in which she suggests you should save 20% of your income after taxes, use 50% of your income for needs, and the remaining 30% for wants. Some people believe you should save more then 20% of your income and some people think you should save less. It all depends on your specific situation, but you need to start saving something, whether it’s 5% or 30%. You need to start building an emergency fund and also a retirement fund. Find areas in your life where you could possibly cut back and then sit down with your family and decide how you are going to start saving.

Why Do People Stop Saving?

The same nonsaving trend is like a disease among millions of American households. Somewhere along the way, the idea of paying for everything at a later time seeped into the hearts and minds of hard-working consumers, robbing them of the ability to effectively control their financial futures. Believe it or not, there was a time, not too long ago, when people actually saved their money to pay for things before they ever bought them. With the evolution of credit cards, that time-honored way of amassing material wealth was forever altered. Today, if a person builds up a large amount of debt, they risk losing their house to the bank and having to declare bankruptcy. That might seem excessive, but in reality, there’s really nothing stopping that person from doing the same thing all over again.

Five Steps to Saving Money Now

1. As soon as you receive your paycheck, deposit a little portion of it into your savings account.
2. You can also set this up with your bank so the money is deposited automatically.
3. If you don’t think you can spare the extra money, think again. It might only mean sacrificing a few fast food meals or wearing the same clothes for a little longer.
4. If you really want to make it happen, think about all the things you absolutely need every month. This includes things like food, clothing, shelter, transportation, and healthcare. Then think about everything else you might be spending your money on and try to eliminate unnecessary expenditures.
5. A great way to stay motivated and keep saving is to calculate the amount of money you’ll
   have saved in a year’s time. Once you actually see the numbers, you might be motivated to put more effort into saving your money for a rainy day.