It’s obvious to everybody that saving money is an essential habit for success. But the big question for everyone who doesn’t save is, “How can I do it?”
Saving money is solely a matter of habit.
Millions of people go through life in poverty and want mainly because they have made bad uses of their financial habits.
If you want to be wealthy, the first habit you must develop is the habit of saving.
In the book “The Richest Man in Babylon,” it says the first lesson of acquiring wealth is that you must save a part of all that you make.
It says “What each of us calls our necessary expenses will always grow to equal our income unless we protest to the contrary.”
This explains why so many people don’t save.
It is human nature to let our instincts for pleasure overpower our rational thinking. This is what economists call hyperbolic discounting, meaning we habitually value present rewards more highly than future rewards.
As a result, we take pleasure in potentially harmful habits because they enhance our lives now more than what we perceive to be their consequences or risks later.
This is the experience of most people.
Most people think more of how they’re going to SPEND money than they do about ways and means of SAVING money.
The requirement for saving money is a willingness to place more value on the future than the present. This requires more force of character than most people have developed, which is why most people aren’t able to do it.
Saving means self-denial and sacrifice of enjoyment and pleasure. For this very reason, anyone who develops the habit of saving also acquires many other needed habits which lead to a successful life, such as self-control, self-confidence, and patience.
Generally speaking, you should be saving at least 20% of what you make.
Even if you’re poor, set aside $10. $10 is better than nothing, but don’t over strain or try to save too much. If 10% is all you can save, be consistent with saving this amount. Otherwise, live according to your income.
When you make the decision that a part of all that you earn is yours to keep, you begin to build wealth.
This statement tends to confuse people because they think to themselves, well isn’t ALL of what I earn mine to keep?
Don’t you pay someone for your electricity? Your internet? Your clothes? Don’t you pay for all the food you eat?
You pay to everyone, but yourself. You’ve worked hard your whole life, but have nothing to show for it.
Learn to pay yourself first.
You do this by learning to eliminate unnecessary expenses, and you do this by learning to budget.
The purpose of a budget is to help you have more money. It allows you to see the difference between your necessary expenses and your casual wishes.
Thinking you can’t do this is naive. Everyone does not earn the same. Some earn a lot less, some a lot more than others. Some have families to support, some don’t. Yet everyone has no real amount of savings to show for their efforts.
If all of your potential savings is being spent on daily expenses then you will never have any money to use when opportunity to make even more wealth eventually knocks.
If you don’t have money saved, then opportunity will always pass you by, never to be seen again. So many great opportunities are missed simply because of a lack of money.
Building wealth starts with the saving habit. You must learn and apply this if you wish to step away from the multitude of people who worry each day about money.