Getting a Real Savings Started (Day 4: How Much?)
Now that you have streamlined your budget and freed up more money, you’re at a good starting point. I mentioned in Day 2, that the formula for determining how much to save may not be what you expect. Most of us have been looking at it this way:
Income – Expenses = Savings
But is that right? How has that been working thus far? If you are like me and most people, you never really seem to have much of anything left over after deducting your expenses. Many time it’s just check to check. But to be real, there are times when you may be Living Check to Monday (check out the book). Either way, that’s why you are embarking upon this task of getting a real savings started.
On Day 1, we talked about paying yourself first. It is a fundamental principle of the wealthy. So, I challenge you to re-think and revise your formula.
Income – Savings = Expenses
I’m a genius! LOL! And I mean, I am truly laughing out loud. But, seriously, that’s what it comes down to. When you get paid, before you start paying this person and that person or this creditor and that creditor, commit to keep to your priorities. Pay your tithes and then pay yourself first. I know it’s awkward to keep saying, pay yourself first when you are third
in line, but we understand the spirit behind the saying. Tithes are not to pay God, but a demonstration of our love and obedience. So, pay those first. Then, pay yourself first, before any other person or creditor.
How much? Well, the reality is we have to work where we are. The exercise of streamlining your expenses gives you a preview into what you may be able to save. Some financial experts recommend you save 15% or 10%. This is going to be a personal decision. The amount you save at this point, does not matter as much as developing the discipline and commitment to do it. You may have to start with 5% or 3%- but start- and be proud. You can grow as you go.
There may be times when your money is tight, but just like Uncle Sam takes his money off the top, and as a committed tither, you take that off the top of your net, commit to pay yourself first. Then with what’s leftover, pay your bills, major incidentals (like food and gas), and then minor incidentals (eating out, subscriptions)- in that order. And then trust that you will reap what you sow. Life is always going to happen. And you’ll show up at age 47 and realize you have been doing wrong all along; as a result, have lost out of hundreds of thousands of dollars- potentially. Sometimes we truly don’t know what we don’t know. Other times, it’s plain we don’t know. In those times, be aggressive. Learn, engage, and apply. You don’t have to do this alone. There are plenty of people like me, who care and want to help.
Tomorrow, we’ll look at options for where to put your savings.
