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~Lyn - Sooke


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~John - Portage Inlet


2014-06-17 21:00:18

Learning to Save - Pay Yourself First

One thing all people with healthy finances have in common is that they save money. However a lot of people really struggle with this basic financial step.  You have plans to save, but by the end of the month somehow there is nothing left.  The tried and true way to fix this problem is known by financial experts as “pay yourself first”

 

So how does it work?

First you need to come up with a realistic monthly budget.  Spend a couple of months tracking your spending to see where your money goes; see if you can identify wasteful spending or places it would be easy to cut costs and then write a budget that delegates a certain amount of money to savings. The day you get paid, before you do anything else, transfer that money to a saving account.

You can also check with your bank and set up a direct transfer.  That way you cannot forget to move the money, it will just be gone before you ever have a chance to look at it.

 

Why does it work?

Most of us waste a lot of money each month. If it is there to spend, we spend it.  If you know there is only $25 in your account, you don’t go to Starbucks, but if there is $125 you do. By moving the money before you start spending it is never there as a temptation.  You cannot miss what you never had, so if it is gone before you see it then you easily learn to live on the slightly smaller budget.

 

How much should I be saving?

That is entirely up to you.  If you truly can’t afford a lot then start small.  Saving only $30 a month will help you set up a good financial habit.  As you get better at budgeting or pay down your bills you can increase this amount.  The important thing is to start, after all a little savings account is better than no savings account.