Beginner's Guide to Saving Money

Saving money, or the "habit of saving," as the American author Napoleon Hill put it many years ago, is the foundation of all financial success.

Having money saved is what gives you the means to take advantage of situations, whether it's to go back to college, start a new business, or buy stocks when the market crashes. There is a big difference between saving and investing. Both saving and investing money have a place in your life, but they play very different roles.

Saving money versus investment

There is a big difference between saving and investing. Both saving and investing money have a place in your life, but they play very different roles.

How you handle these two things can have big implications for your financial success, your stress level, and how wealthy you will eventually become. It can even mean the difference between suffering during a recession or depression and sleeping soundly at night knowing you have enough money on hand.

Saving money is the process of storing money in extremely secure accounts or securities that can be accessed or sold in a very short period of time.

However, investing money is the process of using your money or capital to buy an asset that you believe has a high probability of generating a safe and acceptable rate of return over time, although it may decline for years. Usually this means stocks, bonds, and real estate.

Saving a few dollars really matters

Even if you're committed to saving money, you can fall into the trap of spending $ 5 more here or $ 10 there, thinking, "It's not much. I'll never miss this." Depending on your age, this can be a big mistake.

One of the cornerstones of saving money is understanding the time value of money - that is, the concept that $ 1 today is more valuable than $ 1 a year from now. This money-saving tip can help you transform your balance for the next 10 years as you free up money to put in reserves.

The more time you have your money to grow, the better for you.

How much money should you save

Everyone knows that saving money should be a priority, but how many people know the exact amount of money they should save? Most people mistakenly believe that saving more money is better and saving less is bad.

While this is true in a general sense, the amount of money you need to save depends on your needs, lifestyle preferences, and income. The amount you need to save and have on hand in case of an emergency or golden opportunity may be very different from that of your friends, family, and neighbors. The general rule of thumb is to have three to six months of living expenses saved in an easily accessible account.

The key to saving money is paying yourself first.

The best way to start saving money is to use a technique called "pay yourself first." This technique has been shown time and again to influence people to change their behavior.

Simply put, you are establishing the discipline of putting a certain amount from each paycheck into savings for your future, before paying any other bills. Most people choose a specific percentage to take each month, like 10%, for example.

Ways to make it easier to save money

Sometimes saving money can be difficult. Life often throws curls at us, like unexpected emergencies or injuries, that tend to hamper our economy and routine schedule.

If you are struggling on the path to financial freedom, there are ways to make saving and investing easier.

Try making a game by figuring out ways to spend $ 100 less a month. For example, you can walk home instead of taking the bus or ask for water when you go out to eat instead of tea or coffee.

Set up automatic transfers from your checking account to an investment or savings account and do the same with your paycheck, or use an app like Digit to help you save automatically. Money you never "see" accumulates without feeling like punishment.

Reward yourself and set goals for what you will do when you reach certain savings levels.

 

We hope you enjoy watching this video about Tips to Saving Money

Source: Nate O'Brien

 

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