Was one of your New Year’s resolutions to start saving or be better with your money?
Every year saving money is amongst the top ten most common New Year’s resolutions. The reason for everyone is different, it could be saving for a holiday, paying down debt, to regain control of your finances or just have more!
Many people have committed to this goal and already given up; it can be hard to get ahead if you have overspent during Christmas time, indulged in the boxing day sales or really let go and gone crazy spending with a holiday fun mentality.
All is not lost! Like being healthy saving money and building wealth shouldn’t be a flippant New Year’s resolution. It’s about commitment to a better life; spending less, saving and actually having more because of the choices you make.
Recently I was reminded of one of my favourite books “The Richest Man in Babylon“. It reminded me how simple it is to make these changes; not easy but definitely simple.
As you prepare for the year ahead it is prudent to think about the life you want for yourself. These practical tips, based on my favourite book, offer a clear path to achieving your dream life and start you on your on wealth building journey.
Step 1: Save 10% of your income.
When your income is paid into your bank account put 10% aside and do not touch it.
How??
Set up an automatic transfer to occur each time you get paid whether it be weekly, fortnightly or monthly or if your income varies, manually transfer 10% of each wage payment into a savings account that you cannot easily access.
But what about rent/mortgage & food?! How will I get by?
An easy way to get started is to swap something out of your life, of approximately the same value. Some easy swapping ideas are:
- Bringing your lunch to work instead of buying it
- Not buying your morning coffee – or capping it to just one a day
- Reduce eating out at cafes & restaurants
- No new clothing or “toys” for a set payment period
- Give up your gym membership & start exercising outdoors over summer
- Give up something for that first pay cycle and see how it feels.
You might feel “poor” having to decline a dinner invite or not having anything new, but how do you feel when you look at your bank balance and see that it is positive? And you are about to get paid again?
It’s a great feeling for those who have never saved, for those who have saved and think they are good savers it is a good challenge to push yourselves further.
It is important not to dip into the 10% you have saved at any time. If you start dipping in you will suffer from the treadmill effect. You will feel like you are saving but not be going anywhere.
I encourage you to set up that automatic transfer now, brace yourself for Step 2 and start feeling good about taking control of your future!