Saving must become part of your life. The best way to view it is every dollar you spend you are giving away. Every dollar you save is yours forever.

The key to saving is save little and save often. Every dollar you save increase your wealth, reduces your risks and gives you emotional responses of security and comfort.

Automate your saving by having part of your income directly deposited into an account that you never touch, unless you are investing the money. These savings will form the platform that one day allow you to earn money without working.

The best rule of thumb is to save 10-20% of every dollar you ever earn or receive.

A few words of warning with saving. The biggest risk to savings is you and the second biggest risk is inflation. As time goes on our money buys less. The longer savings are left in cash the more risk that inflation will erode the buying power of those savings. Thus it is important that money is converted from savings to investments.

Seek expert advice when doing so, but be wary of commission based sales people.

 

Top 5 Saving Tips

1. Have savings automatically deducted from your pay into a savings account, or from your own account immediately after pay goes in.
2. Keep your savings account separate
3. Set a budget and stick to it
4. Shop around for a very competitive interest rate
5. Convert savings into investments regularly (seek advice)

 

4 Pools of Savings

You should aim to develop 3 pools of savings

1. Emergency Saving Fund - This should equal 6-10 mths of your net wages or earnings and is placed aside in case you lose your income sources or have an accident or crisis.
2. Medium Term Expenses - such as cars, fridges, holidays etc
3. Pre-retirement Savings to allow you to retire early or access funds for early or partial early retirement
4. Retirement Savings - usually in the form of a 401K or Superannuation account.

 

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Disclaimer - this information is general in nature and does not take into account your individual circumstance. You should always seek professional independent advice prior to acting on this information or making any decisions based on this information.