It seems like only yesterday that savers were docks. They kept piggy banks. They drove last year’s cars. They fished in their change purses for nickels while the superstars flashed credit cards.
Today, values have changed. The new object of veneration is not money on the hoof, but money in the bank; and the dorks have it. The more you save the freer you get because time is on the saver’s side. Compound interest floats all boats.
Like most people who make their own money, I started out living paycheck to paycheck. I could cover my bills (most of the time). But I “knew” that I could not afford to save so I did not bother. Even had I bothered, my small $20 or so a week would not have seemed worth the effort.
Some years (and many lost $20s) later, I learned I was wrong. Anyone can put money aside, at any level of income. You just have to do it. Of all of the New Era’s new virtues daily jogging, eating bran, quitting smoking; saving money is the simplest and the least demanding of your time and attention. Savers can lie in a hammock all day eating Mars Bars and still feel good about themselves. As for the value of a tiny $20 a week.
A financial plan is grounded in savings. That is how you get enough money to pay off your debts and accumulate and investment fund. How much should you save? The answer comes from ancient times. You tithe. It was learned generations ago and is still true that most people can save up to 10 percent of their incomes and hardly notice. I can’t tell you why it works, only that it does. Maybe tithing just collects the money that otherwise goes up in smoke (it’s 9 am; do you know where yesterday’s $10 is?). On a $30,000 paycheck, you can save $250 a month, $3,000 a year. On $60,000, shoot for $500a month, $6,000 a year. On $100,000, save $833 a month, $10,000 a year.
I hear you, I hear you. You say you can’t do it. Your rent is too high, your bills are too large, your needs are too great, your credit lines are too long. None of those things is actually an impediment, but it will take you awhile to see it. So start by saving only 5 percent of your income.