Saving: The Best Habit for Financial Security



When it comes to mapping out your financial future, no habit is more important than that of saving, which is a lesson I learned shortly after graduating college. At that time, I was 23 years old, married, with a 2-year-old child at home and a newborn on the way. So, when a friend explained the importance of saving to me at such a young age, it was the furthest thing from my mind, as I was just trying to get by and support my family. Thankfully, however, I took my friend’s advice and began saving. It has since provided me and my family with the financial security that it promised long ago. Yet, the most promising news is this: securing a financial future is possible for everyone, regardless of income level, but it requires disciplined saving, which is the cornerstone of all good financial habits. 

Now you may ask yourself, why save? The unfortunate reality is that most people today are living paycheck to paycheck and do not have the financial resources to handle life’s most important needs. However, saving provides the security to overcome these financial hurdles by providing a variety of benefits, including:   

  1. Having funds available for major expenses (house, car, college)
  2. Having funds available for emergencies (home repairs, replacing appliances)
  3. Building wealth and retirement

Although the idea of saving can seem a bit overwhelming at first, it begins by simply putting a plan together and following it. To help you get started, here are some practices I have found to be very useful over the years: 

  1. Track expenses and create a budget. Record how much you spend and where you spend it, even that cup of coffee from Starbucks (performing this task shocks most people). Once you know your expenses, create a budget to show your expenses relative to your income, and then identify areas where you can plan your spending.
  2. ALWAYS pay yourself first. This means that your savings is the first “bill” that you pay each and every month (and it should be in your budget). When you approach savings with this mentality, you will quickly learn to live without those funds for your daily needs. Meanwhile, your savings will continue to grow, if wisely invested.
  3. Save a percentage of income and increase it over time. Although you should aim to save at least 10% of your income, the most important thing is that you begin saving, and that you continue to increase it over time. So, if you can only save 1 – 2% of your income now, start there and increase it by 1 – 2% every quarter. By continuously increasing the amount you save over time, your savings will grow faster with little impact to your daily financial needs.
  4. Automate your savings. To make the habit of saving easier, it is best to automate deposits directly into your savings accounts. Automation eliminates the possibility of forgetting to transfer funds to your savings accounts, while also eliminating the temptation to spend the money elsewhere.
  5. Invest wisely. Wherever you put your savings, identify the best tools and resources available to help invest your money wisely.  If necessary, utilize the services of an investment professional.

Saving is a habit that is built over time, it doesn’t just happen overnight. Moreover, it is the cornerstone of all good financial habits and will provide a lifetime of benefits. If you need further guidance on saving, there are many great books and resources available. However, the single most important action you can take is to begin saving today! 

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