You know you need to save more money. The most important rule of thumb is to pay yourself first and pay your expenses later. You are the most important investment you’ll ever make, and refusing to pay yourself is not a good way to go about life. Everyone should be saving at least 15% of their discretionary income, and it should be included in the monthly expenses every month. This is the bare minimum families must save if you want to remain financially free and without financial stress for the rest of your life if you ever hope to retire. If you’re not entirely certain you can do this, there are a few tips that might help you stay more focused and learn to appropriately designate a portion of your income to your savings account every month from this point forward.
Set Aside Your Savings First
The most important step to take when learning how to save your income is to make yourself the most important expense you have. Sit down and create a budget. See what is coming in, what is going out, how you can save more if needed, and then add an additional 15% to your savings each month. You don’t save 15% of what’s left. You save 15% and then spend what’s left.
For example, if you earn $100,000 per year, your job is to save $15,000 per year. If you’re paid every 2 weeks, you receive 26 paychecks per year. You want to save before taxes, too, so that’s going to make a little more sense as you do the math. You’re going to put approximately $576.92 per paycheck into savings. Then you take the rest and you determine how you spend it following your savings.
Learn to Invest Wisely
You can make your savings go a lot farther if you learn to appropriately invest what you save. A self directed IRA is a great option for someone who wants to have control over their finances and still take a calculated risk with their savings. It’s recommended people who save put their money into IRAs including the self-directed type, ROTH, and even a 401k. This is where the most benefit occurs, and it can help you make the decision to retire earlier with enough money to live comfortably and happily for the rest of your life.
Start Now and Practice
The best way to learn to save money is to practice. It’s not always easy to see how it makes sense and how it is even possible when you don’t take the time to sit down and create a budget. You have the time, and you have the ability to get to work making sure your family is cared for. You must get started, though, or it will never happen. It won’t be easy, but it can easily become a habit when you make it a point to make saving your first priority.
Put your savings away first. Once you do that, you work with what’s left. You pay the bills next. You spend what’s left, or you save a little more. The beauty of budgeting is you get to do it the way you want to do it without focusing too much on how stressful it is. Once you make it a habit, the choice to continue saving becomes much easier.
Budgeting isn’t fun, but it’s necessary. Most people are unaware they’re unable to retire the way they save right now, and many Americans are doing without any savings. You don’t have to start big. Start somewhere to make it happen. The more you put into that savings account, the more you want to put in there. The feeling you get when you watch it grow is a good feeling, and it inspires you to continue.