A few days ago, we had a pleasant holiday gathering with close family friends. The meal was simple, but very pleasing to the palate. We were two couples in attendance, and as usual, a good time was had by all. The young couple, recently married, is getting a fresh start on life, and us, the older, more mature couple, that has had more than a few walks around the garden of life. We have known each for many years now, so our conversations are controlled and educational.
We gather, quite regularly, for conversation and pleasantries. During our meals and after our meals we converse on many topics and sometimes the subject turns to money and how to survive this gauntlet. The young woman in our group is a friendly, always smiling personality, who’s very easy to talk with, and I must add, that she is also a very good listener.
As I was savoring my meal, she turned her focus towards me and I was expecting her to ask, “How’s your dinner?”, but she didn’t ask about my dinner, instead she said, Paul, can you give us a few tips to save money fast. I didn’t think it was a trick question, so I continued chewing to enjoy my mouthful, and began crafting my answer to her question.
Each member of the group brings something intelligent to the conversation and we are long past trying to impress each other with cleverly manufactured stories and hyperbole. I knew that she wanted an answer that applied to their situation, and this is what I said.
Keep it simple.
Take 10% of everything you earn and put it in a saving account for one year!
Why 10%, she asked. I said 10% because it’s an easy number to remember, and a small amount. I continued, saying that this amount is easy to afford and not too debilitating on your total amount. Don’t use a fixed number such as 100 or 200 dollars per month because with this method you quickly lose your focus and lose track of your goal. Some months, when you struggle less financially, you are capable of saving more but when things get rough you reduce the amount. Soon, like all good resolutions, they end up in the proverbial trash bin.
My 10% rule works for all amounts and it works all the time.
Set it, … and forget it!
A goal is something you want to achieve.
Do you have a goal? Is your goal to save money? … then please keep reading.
Without a goal, you are wandering aimlessly in the desert. Without a goal, you are a ship with no port to sail to.
In the course of our educational indoctrination we are relieved of our ability to think for ourselves.
Once you cannot make decisions, you are left to follow anyone and everyone, or any new fad or fashion that comes along.
Soon you are wandering aimlessly about, with no direction. How can anyone move forward with such a mindset? Early in life, we are taught to believe that things are too hard and complicated for us to grasp, hence the confusion and lack of direction.
Keep things simple. You want to save money. Simple, yes.
That is your goal!
Now, you have a goal, but you need a plan to get there.
As soon as you have a goal, you can design a plan for getting there. If you have no goal, You don’t need a plan. Simply wander about aimlessly until the day you hit the proverbial wall.
Let’s make a plan. You want to save money. This is my plan for you.
Save 10% of everything you earn, … Period!
That’s it. Do not try to save impossible amounts of money when you are earning less than others are. Instead, set realistic targets. Trying to save huge amounts to impress others will not work for you. Work within your parameters.
A 10% savings amount, is a target that is very realistic and practical. Simply put 10% of every paycheck in a savings account.
If you are a bit lacking in discipline, lock-in this account for one year.
Discipline is a big scary word that often frightens people away. They believe that discipline is some type of magic dust that is only available to the super-powerful and the super-achievers.
When you have a goal and a plan, it’s easier to discipline yourself.
If you follow this simple 10% rule, you will be very impressed with your performance at the end of one year.
You won’t be able to buy a yacht or a private jet, but you will have money in your savings account. In addition to having a definite amount, you will have strengthened your will to save.
You will double and maybe even triple you “discipline quotient”.
I also believe that you will have acquired a new respect for money and its purpose in our society.
You will no longer have bad thoughts about money and you will no longer connect it with greed.
I’m interested in hearing how you save for a rainy day, and what methods work for you.
Does this sound like a method that would work for you and have you ever tried something similar?