We are often approached by individuals who are completely frustrated by their inability to save money. People have good intentions, they want to build up a nest egg but just never seem to quite get there. Why is this?
Saving is hard. There are always many other potential uses for your money and most of them are a lot more fun than tying your money up for a rainy day in the future! But saving is also extremely worthwhile. Apart from the financial benefit of building up a war chest, if you are (or become) a good saver, you are also far less likely to squander money away. So you end up maximising the impact of your financial resources.
But how do you become a good saver? Here are three ideas that we hope will help you.
Pay Yourself First
“Don’t save what is left after spending; spend what is left after saving” This is a famous quote from Warren Buffett, the well-known sage of investments who also happens to be a billionaire! His message here is that one sure-fire way to fail is to save whatever is left over at the end of the month. We can always find something to spend our money on, so more often than not there will simply be no money left to save when the spending is finished. Have you ever noticed how after getting a pay rise, your spending immediately increases to meet your new found wealth?
Instead of this approach, have a Standing Order or Direct Debit in place that will transfer money out of your current account into a savings plan / account the day after payday. Then it is gone and forgotten. And live off what is left for the remainder of the month. Now you’ve been paid first.
Have a Goal
Saving just for a rainy day is difficult. If you don’t find saving easy, saving for a particular event is easier. Give yourself a clear goal. It might be to buy a new car in three years’ time without having to borrow for it. Or maybe to go on that Caribbean cruise when you are 60. Or it might be to have €X,000 in hand to enable your child to go to college in 6 years’ time.
Make the goal real so that you can easily visualise success. And then when you achieve it, celebrate it!
Live within your Means
At the end of the day, what kills saving more than anything is when you start living a lifestyle you cannot afford. Because you cannot justify saving money if you are also the owner of a large credit card bill. Because of the high rates of interest, this should be immediately paid off.
So avoid those big credit card bills. Live within your means, even if this means foregoing some purchases you want to make.
Clear goals, paying yourself first and living within your means are sure-fire ways to savings success.
For more advice, check out the rest of our blog. At Gallivan Financial, our team of experts are always on hand to help. Get in touch today. We’ll be delighted to hear from you.
All the best,
The Team at Gallivan Financial