We are into the second month of the year and most people resolve to save money, budget better, and get out of debt. Statistics show that 34% make money related resolutions. Also, according to the statistics on the Statistics Brain Research Institute website, 25% of Americans have no savings at all, 40% are not saving towards retirement, and 38% have an emergency fund to fall back on. Let’s discuss the goal to save money.
Saving is such a sexy habit to have. It is exciting when you have funds saved towards a financial goal. When I see the growth of my savings, I get so excited about it. I haven’t always been a great saver because of my financial challenges from job loss. However, I found a way to make it work. You can start out as small as $1 to put away each time you receive an income whether it is bi-weekly, semi-monthly, or monthly. It may not seem like a lot but it will add up. And you have the option to increase it without affecting your other expenses. The key is to make it a good habit and maintain it. Plus you should make sure you pay yourself first every time.
Saving is sexy because it attracts people that have the same financial goals you may have. Usually those that have things in common can motivate each other to reach their goal. When you are in a room full of individuals discussing finances, everyone is interested in hearing about your savings goals. It makes them want to save more and set other financial goals. For example, when you are discussing saving for a house down payment, you can hear others success stories and gain ideas about how they achieved that goal. This may make you want to do the same if you desire to purchase a home.
Saving is also sexy when it appeals to lending institutions. If you are looking to purchase a home, mortgage companies and banks like to see that you have a substantial savings account. For instance, if you have 3 months of savings equivalent to your expected monthly mortgage amount (expected mortgage = $1000 and your 3 months savings = $3000) they would consider you less of a risk in the event of a financial hardship. This would show them that you are prepared to continue to pay your mortgage. I would often suggest to my clients that they should have 2 savings accounts (1 for emergency or any other financial goals and 1 that is ONLY for anything related to their housing). This way if they need to pay for a down payment, they have the funds and it does not jeopardize or deplete all of their savings for emergency, college tuition, or a family trip.
No matter what your financial goals are, strive to at least start saving if you haven’t. If you are saving, re-assess your goals and make better plans. Remember all it takes is getting the habit in place.
Tonisha Brown is a wife, mother of 3, and the founder of Living in Abundance where she believes in bridging families together through fitness and finance.