Save first?

If you starting to place a higher importance on managing your finances, you may be wondering what the best approach is. You may be paying you bills on time, but that is only the first steps to successfully managing your finances. The key to managing your finances successfully is to emphasize savings. But how much should you save? What’s the method that you should be using to save money? Where should your extra money be going? While I can’t answer all of these questions in this post, this is one of the many questions that Young Family Finance hopes to conquer. Instead, I want to discuss one way that will make saving your money much easier. If you follow this advice, you will be surprised at how much money you can acquire.

Save Your Money First

When I was in high school, I was working part-time. Every two weeks I would get my paycheck. It wasn’t anything compared to what I make now, but at the time, it was a decent amount. Instead of wasting my money right away, I would put 80% into my savings account and cash out 20%. I did this with every paycheck. In the two years that I worked before college, I ended up saving $5,000 for college.

The advantage to saving money first (taking it out of your paycheck before you consider using it) is that you never think about spending this money. By setting it aside, you are spending it on your future instead of immediate possessions.

Think about what happens when you don’t set money aside. Maybe a few extra nights out instead of cooking at home? Or maybe a new phone or electronic device? Admit it – without making savings a priority, even the most frugal person breaks down.

Saving First Isn’t Cut and Dry

When you are starting to save money, it isn’t as easy as putting a certain amount in the bank each month and cashing the rest. Everyone has bills to pay. Different financial pressure for everyone makes it difficult to set hard and fast rules that apply to everyone. Unfortunately this means that I can’t tell you how much you should save. What I can suggest is that you start small and to celebrate your achievements. When you start saving 5% or 10% of your income, reward yourself. Then set a larger amount for savings once you reach that goal.

The best advice for finances in general (as well as saving your money) is that it has to work for you. If you try to adopt someone else’s plan, it may give you structure, but if you fail to make it your own you may quit altogether. Take the next few minutes and establish your own savings goals. You will be surprised how fast it adds up.