Saving for the Future: 7 Easy Steps You can do Right Now
Your future including your financial future is unpredictable. You might have a lot of money today, but a single health problem, accident, legal problem, economic downturn, and so on can immediately land you in poverty anytime.Also, do you know that in America for example, 4 in 10 adults do not have money to cover USD 400 of unexpected expenses? These people would likely have to resort to bad measures like borrowing money from loan sharks or selling their prized possessions at meager prices.
This is how important saving for the future is. Besides unexpected emergency expenses, you need to save for the future for:
- Changes in life circumstances:
You might suddenly be terminated from your job, your partner becomes pregnant and you have young children, your parents might become ill and so on. You need a fairly large savings to cope with these.
- Financial security:
A healthy financial standing is always good. Not only does it help you to cope with financial emergencies, but it also gives you the power to live the way you want to financially or at least, in relative comfort.
- Retirement:
Lastly, you need to save for your retirement, which is a time in your life which you are supposed to not be working anymore for money and are just enjoying the fruits of your decades long work.
Retirement age is also the time when you supposedly don’t have the capabilities anymore to work. If you have not saved for your retirement, you are left with a pitiful experience of having to work even though your body can’t handle working anymore.
Here are a few easy steps you can implement to save money for the future:
Note: These information were based from my life as well as from online sources discussing saving for the future.
7 Easy steps you can do right now to save for the future:
1. Start now2. Make a budget and track your expenses
3. Cut non-essentials
4. Stick to short and long term savings goals
5. Decide which are your priorities
6. Pick the right tools for savings growth
7. Include your partner and children
Final Words
The Details:
1. Start now
Right now would be a good time to start saving for your future. You’re reading this article, right? Are you thinking of doing something after you’ve read this article?
Are you smoking or even drinking wine or some alcohol while reading this article? All these activities I previously mentioned are costing you money. If you have just abstained from them, you would have saved some money and is on your way to saving for the future.
Usually, the most difficult phase of any goal is at the start, when you are just taking the first steps. You’ll be clumsy and make a lot of mistakes initially, but you’ll get better and better until you become an expert at it.
The same goes with saving for the future, you’ll likely make a lot of mistakes and not save a lot of money initially, but as you continue improving, gradually you’ll become an expert at saving for the future that you are able to save a lot of money. Be patient and never give up!
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2. Make a budget and track your expenses
You should start budgeting and also track your expenses. Your budget and expenses are the first things you should worry about more than your savings.
Your budget must be designed in such a way that all your financial needs are addressed while having spare money that is saved for the future.
But budget have limitations as it relates to expenses. It might be entirely possible that your budget is inadequate for your expenses.
This is an indicator that you should raise more money, like for example finding a higher paying job or working more. Without a budget, you won’t even know that you need to raise more money.
For example, if you budget only for everyday expenses like food and lodging, what happens if you get sick and are unable to work? Your budget must cover these emergencies as well.
Having no budget is like navigating a ship without a compass, where you can land your ship to either prosperity or more likely into poverty.
If you are a family person, you should make your budget together with your family. You might have a sufficient budget that covers everything, but if your budget leaves your family wanting, then it is inadequate.
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3. Cut non-essentials
As you progress with your financial plan, you should start cutting non-essentials, or the activities and things you can live without. This requires a change in lifestyle, like not buying new clothes all the time and making do with what you have.
3.1 Also, stop upgrading your lifestyle whenever you have a pay rise. For example, if you receive a ten percent increase in your salary, don’t buy a more expensive car, but increase your savings in the bank by ten percent.
3.2 You might want also to cut down on non-essential activities like watching television for hours on end after work. You could put the extra time you save into money making part-time work or business.
3.3 Also, start saving as soon as you receive money, for example, if you’re a salesperson, stop celebrating too much when you receive a fat commission. Deposit your commission in the bank immediately.
3.4 By putting your money in the bank and not in your wallet, you make it difficult for yourself to use your saved money, making you less tempted to spend on non-essentials.
3.5 As you continue saving, you need to learn what’s the difference between “Want” and “Need”, so you don’t buy on impulse things you don’t really need.
A good strategy would be to use the “30-Day Rule”. This strategy involves waiting for thirty days before you buy something, letting your impulse buying desire simmer down that you are now able to think with a clear mind.
3.6 Don’t overdo it. Life is also about enjoyment and happiness and not only money. Do not trade happiness for money. Don’t think that material possessions and luxuries can make you happy. Learn to enjoy life without overdoing it.
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4. Stick to short and long term savings goals
After you’ve made a budget and reigned down on your expenses and non-essentials, you would have started saving money already.
This would be a good time to set your short and long-term financial goals. Your short-term goals could be as simple as buying new tools for your handyman business, to long-term goals like buying a house or even starting a new business.
To further help you achieve your savings goals, you should setup your savings activities to be automatic. For example, you could setup a savings plan where ten percent of your salary is automatically saved in the bank.
This would help you to stick with your savings goals with as little inconvenience to you as possible. Also, individually separate your savings funds such that you have an idea how each one is doing.
For example, if you’re saving for new tools as well as for your retirement and/or emergency funds, don’t mix them together so you won’t be for example, tempted to spend all your savings on new tools to the detriment of your retirement and/or emergency funds.
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5. Decide which are your priorities
Though you may come to the point where you already have a lot of savings, all of your savings are still not enough to provide you with everything you can possibly desire.
You have to ultimately decide which are your financial priorities in life. Is it your children’s college fund, your retirement fund or something else?
Knowing your financial priorities in life enables you to devote most of your savings to the things that are financially important to you above all else.
But make sure that your financial priorities are right by consulting your family, friends and reputable financial experts who knows what is financially best for you.
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6. Pick the right tools for savings growth
Educate yourself in finance and investment, so your savings grows even more. Pick the right savings and investment tools that matches your financial situation.
Are you still financially fragile and deficient? Then perhaps you need to save more rather than invest and risk losing your savings. Perhaps you need to grow your savings account first.
Savings accounts are known for their low returns but are very low risk. In fact, the government even insures a certain amount of your savings in case your bank runs into financial problems.
If you are putting your money in riskier investments like the stock and money market, be warned that many people have lost a lot or even all of their savings in these kinds of investments.
You must have a tolerance for financial risk and it is highly recommended that you consult with reputable financial experts before you put your savings in risky but potentially high yielding investments.
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7. Include your partner and children
If you have a partner and/or children, you must include them in your financial savings decisions. This is because your financial savings decision also affect them, especially your children.
You might have to explain to your partner and children why they can’t have new things all of the time. This is especially true for your children who may be too young to understand the concept of working for money.
Not only that, you might have to explain to your children the concept of saving and investing instead of just using money to buy things.
At an early age, your children must have a good grasp of the concept of money thru your teachings, so that they even at a young age can learn to save and invest money.
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Final Words
It is getting harder and harder to save money these days. In fact, a lot of people even in first world countries have little to no savings to tide them over during financial emergencies.
This and other important reasons are why you should always save for the future by starting now, at this very moment.
Proceed by making a budget and cutting down on the non-essentials in life. Then, have long and short term savings goals while deciding on your financial priorities. Then, invest your money wisely so you can make your savings grow even bigger.
Involve your partner and family in your savings and investment decision. Explain to them the benefits of saving and investing money, so they can also make better financial decisions for themselves.
Lastly, don’t overdo it. Life is also about enjoyment and happiness and not only about saving as much money as you can and being the richest person around.
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You Might Be Interested To Read This Article:
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