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One of the most important steps on the journey to financial security is saving on a regular basis.
There are many benefits to saving on a regular basis including:
The three bullet points above are fairly common sense. However, what is less clear, is how to master the skill of saving money and eventually improving your financial situation. This blog will list a few ways in which you can master the skill of saving money.
This point might sound obvious, however, according to a study by bankrate.com a staggering 65% of surveyed American’s admit to saving ‘little or nothing on a regular basis’.
The idea of saving money can seem overwhelming. The desire to eventually purchase a house or something else of that size can often seem so large, people avoid starting.
The key to saving is by starting small. Don’t overcommit yourself by setting unachievable goals.
Many deVere clients opt for regular savings vehicles in which you automatically pay a monthly or quarterly amount into your account. By doing this, you don’t have to remember to make the payment and you will also not be tempted to skip a month. The amount will simply transfer to your regular savings account on your payday.
Depending on where you live, you may be paying into a workplace pension, many deVere clients live in regions where there is not automatic pension legislation. As a result, the responsibility is on the individual to ensure they look after their own financial security.
One of the most beneficial parts of saving on a regular basis is compound interest. Compound interest refers to the principle that when you save money, as well as earning interest on the savings, you also earn interest on the interest itself.
If you wait until you reach the peak in your career to start saving, you are doing yourself a major disservice. Firstly, you will miss out on years of potential growth, where your savings can benefit from market growth and compound interest. Secondly, if you fail to build the habit of saving whilst you are earning less money, it will become more difficult to start when you are earning more. This is because you will develop the habit of spending everything you earn. This habit can be very hard to break. Moreover, the longer you wait, the more financial commitments you are likely to have, including mortgage payments and the cost of children.
If at the end of the month you have money left over from your income, that’s excellent, you’ve already got a starting point. You will be able to save this amount each month and perhaps a little more.
However, many people find they have nothing left at the end of the month. This doesn’t necessarily mean they don’t earn enough to save, it more likely indicates, they are not budgeting.
The easiest way to rectify this is by saving before you spend instead of seeing what’s leftover at the end of the month.
Creating discipline often stems from setting targets. If you have nothing to aim for it can be extremely easy to give up.
By sitting down or arranging a Zoom with a deVere financial planner you can benefit from being taken through the goal-setting process. This will allow you to identify the things which you wish to achieve and then you can map out a plan on how to get there.
Don't hesitate to learn all about our recipe for success in easy steps!