No matter who you are or what you are doing – financial health is key to life.
While our physical health and our mental health are clearly important, it is money that does make the world go round, and we can be as fit as a fiddle – but if we don’t have two coins to rub together, we can’t really do much at all. Worse still, we can’t do anything in the event of an emergency – say we lose our jobs, our fitness isn’t going to pay our bills and mortgage is it? Financial health is an absolute priority, especially if we are in charge of a family.
Where do you start with financial health? Well – with a full savings account of course! See, we could all do a little better at savings especially if we are in the situation where we spend a lot on goods we might not really need. Savings, like going to the gym to get fit, can be some quite tough work. There are a number of things that savings can do for us. In the first instance, it can serve as an emergency fund for emergency situations. Secondly, it can allow you to buy the things you want, and finally, it can be used as an investment. In fact, savings should really be used for all three situations! Save money to make an emergency foundation, build on that foundation to create money to buy things and then if you don’t want to purchase, use the savings to invest and grow your wealth.
We live in the era of instant gratification thanks to advances in both marketing and technology. It’s never been easier to get what we want, and that is dangerous in a number of ways. Firstly, it’s going to ensure that you either break even or go into debt at the end of every month as you use your money to do whatever you like without consequence. This won’t allow you to save, though. Despite improvements in wealth, it does seem as though fewer people are saving anything at all. If you have no savings, it could very well be a dangerous situation to be in. The other hand of this is that credit cards and heavy interest loans are seemingly freely available and allow anyone to get anything they want with no present-time consequence and then get stuck in a debt cycle down the road. It is very easy to develop bad spending habits in the 21st century. The problem with debt is that it will not allow you to save as the interest rates on debt do outweigh the interest rates on savings accounts – meaning that money is wasted if it is saved instead of paying off debts. Do you see how debt could be so dangerous now? If you are debt free – you’re in the perfect position to save as you will not have to worry about paying off outstanding balances before you start to save money. However, use your debt-free position to keep yourself that way. It is pointless getting yourself into high levels of debt for no reason unless it is a dire emergency.
This all being said – it has never been a better time to start saving. There are more ways to get paid than ever before and more opportunities to invest and save your wealth than in years gone by.The very first thing to do to grow any sort of savings account is to start spending less. By simply spending less than you earn in month you are going to create a profit from your pay-cheque. This profit? It’s how you can save to buy items without dipping into debt. The profit? It’s how you can build a healthy savings account. Anytime you want a big-ticket electronic item – a new television or a Playstation for the kids, then a monthly excess of cash is the best way to make that happen. Not only can it serve as a big deposit on a fair finance deal, but it might also even buy the product outright if you’re fairly frugal. You might find that this is a bad idea, why would anyone spend when they need to save? The point is to build a good financial habit instead of a bad one. Would you rather pay for things yourself or allow debt to take control?
How can you grow your profit? Get a better paying job for one! But don’t worry, you can still grow your monthly excess to put away by doing a number of things. Firstly, it’s time to budget.
Budgeting requires a lot of thought and work, but once the groundwork is in place, you’ll be good to go. There are plenty of ways you can budget, but the simplest way of all is to simply keep track of money on a basic spreadsheet. Divide your spending into section based on what the item or product purchased was and you’ll have a detailed breakdown of your monthly spend that can be converted into charts for an easy view of your percentages. The information gained from budgeting can be used to make decisions that can lower your monthly spending. Are you spending too much on transport or food? Take the bus or walk while buying cheaper alternatives of the food brands you love. Spending a fortune on energy bills or internet? Compare energy and internet service providers and their costs to see if you can save money on your monthly bills. All this data can be gained from your budget – so make the use of your receipts and gather the information you need to start saving.
It’s important not to waste money either. Are you buying two bottles of bottled water for £1.50 a day? That’s £15 over ten days and £150 over one hundred days. A good water bottle is going to last you about a year and costs £10-15 while a water filter can be really cheap and set you back less than ten pounds. That’s £25 for a year’s supply of filtered water saving you a fair wedge of cash in the long run. This goes for coffee and even washing clothes as well. Spending money to save money goes a really long way.
If you need to be mean to yourself because you are a shopaholic, you might need to treat your savings as an expense. Put away 10% of what you earn a month to start building a savings account regardless of what you earn and learn to live with the rest. This is a good idea even if you are creating that excess every month and can help you build your finances quickly in the short term.
So, there’s a whole bunch of ways listed in how you can save money and we know why it is so important, right? If an emergency does happen, you and your family can deal with it financially before it becomes a real drag on your finances. What’s more you can save up not only to secure a financial future, but to treat yourself and your family to nice presents and amazing holidays! Saving money is a great way to gain a fast pass to the good life. Would you rather that or an extra few coffees a month?
If you can find ways to save money, great! If you can’t, then you need to look everywhere and anywhere where you can realistically cut down on your spending. Spending should be a reward and not an everyday thing. Stay well clear of spending and debt to start putting money away!
One thought on “The Importance of Putting Money Away”
Very interesting read. Great tips and something more people should be doing with bills constantly on the rise.