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Paying yourself is a important bill
We all have bills to pay. The next mortgage or rent payment. Paying off that auto loan or credit card. Gas, electric, water, internet, cable, Netflix? The list goes on. It is no wonder why I hear so many people tell me that they cant save money. Now I am not living on another planet, maybe for some of you that is the hard truth, for whatever reason you have gotten into such a rut you cant even break 0- diddlysquat- nothing at the end of each month. In that case you may want to consult with a debt consolidation expert.
I am talking to those of you who are not in that rut, but maybe something similar. The first thing I want you to do is calculate how much money you make in 1 month. If you work for a company or you are self-employed. Figure out what you make in a week, and then calculate that to one month. For example. Lets say you make 600$ in a week average, that would mean you make 2400 a month. Now, how much do you have in bills every month? 200? 500? 1000? 2000? As long as that number is lower then your monthly income, you can save money using the simplest of method out there.
Pay yourself first
The first thing you need to do is create a savings account, stop letting everything sit in your checking account and mindlessly spending your leftovers of things you don't need. Check with your bank and see if they offer Money market savings accounts which generally yield more monthly dividends then traditional accounts. (Dividends are payments made to you by your bank every month you keep liquid funds in your savings accounts). You can also check the rates on various different certificate accounts and IRAs your bank offers (These generally yield very high dividends but you can not use the liquid funds until a certain maturity date) I first urge you to research your bank and see what options they offer, also browse around at other banks to see if they have better deals on accounts.
Once you have the savings account setup- treat yourself just like any other bill- and pay yourself every month- if not every single check you get. Once you figure out what you need to pay the bills and eat you can from there determine how much you would be able to pay yourself- and how often (Weekly/Bi-Weekly/Monthly). Once that money is tucked away in your savings account, DO NOT TOUCH IT, unless extreme emergency and unexpected expense. (Coffee in the morning or going to the movies is NOT an emergency). After not long at all you will develop a financial cushion that will make you feel much better every day, you will notice it, your family will notice it, you will be happier.
Its simple math!
Would be X a year
Let me break this down for you. Do you have 200$ in expendable funds each month? 400$? 50$? How much is it. Lets say you get paid every 2 weeks and you save 100 from every check/ twice a month. If you apply that every month for 1 year you would have saved a total of 2400 by the end of the year PLUS dividends. What do you do with your tax return? Tuck it away in savings too! Trust me, just make little sacrifices on the unimportant things in life you do not need and create more expendable funds for yourself, use these funds to pay YOU for YOUR future. I guarantee this will make you a happier person. You will be more finically stable, less fear of being stuck or in a rut, less fear of the unexpected.
Learn to save more and spend less
Would you find a financial advisor helpful in trying to save money?
Once you have created your savings account cushion, you can feel free to create other accounts (I choose to open high interest certificates with 1-3 year mature dates and have 5-6 open at once time that each mature within every 6 months or so of eachother) This is called a CD latter.
This CD latter can serve multiple purposes- you can choose to have the dividends it yields go into another account, right back into the certificate or into your checking. Once this certificate matures (Between 6 months and 3 years later) you will get one big lump some of money based on what you put in plus the interest. I like to use these little accounts to spoil myself, but you can do what you choose with it. If you want to roll the funds back into another certificate at it maturity you can do that as well.
Lets go over the basics
Make a savings account and pay that account AS MUCH AS POSSIBLE, on a weekly/or monthly basis- whatever you can manage.
Stop spending your money on things you really don't need- put those funds to use in a high interest account and have those funds generate you dividends.
Any extra/ 50 a month/ 15 a month/ or even 5 a month- toss it into a high interest certificate that you can use to save more- or reward yourself for a job well done.
Stop being a slave to money- make money work for you