Saving Made Simple"I never realized I could accumulate wealth over time by putting a small amount of money aside each month. I always thought I had to wait until I had large amounts of money before I could start a retirement or emergency savings account." This comment came from a woman who had been attending one of my Financial Dating classes. This paradigm shift was causing a new world of financial possibilities to open up for her. I experienced a similar shift when I helped my husband open his retirement account. We started his account with just $25. Each month we increased his contributions by $10. Because the amount was so small, we found it easy to do, and it never created financial strain for us. We were able to boost our retirement savings even more after we paid off our credit card debt. We took our monthly credit card payment and applied it towards our retirement savings. Because we had already adjusted financially to making our credit card payments, it was easy to apply the payments towards retirement. This strategy allowed us to significantly boost our retirement contributions. Invest in Yourself First My husband and I invested in ourselves first by automating our payments towards our credit card debts, and our retirement and emergency savings. We didn't wait to see if we would have money available at the end of each month. We took it out automatically, during the month, by setting up automatic drafts through our retirement accounts and through our bank’s on-line bill pay service. Our payments were never late, and they occurred each month, like clockwork. I notice many couples and individuals do exactly the opposite. They wait to see how much money they have at the end of the month before putting it towards their savings. Not surprisingly, when the end of the month rolls around, they discover there’s no money left. It’s human nature to spend the amount of money we have in our checking accounts. I know the "invest in yourself first" concept can be challenging for self-employed professionals who can’t predict exactly how much they’ll make during any given month. My recommendation is: make your payments automatic by choosing a time of the month when you’re most likely to have cash coming in from sales, projects or clients. Some people are resistant to this concept; they want to maintain a sense of control over when their money leaves their checking account. Or they’re resistant because they feel like they have little “wiggle room” − they’re living from paycheck to paycheck and it seems that there’s absolutely no extra money for savings. While it's good to notice resistance to automating your savings, you need to be honest and ask yourself: Is my current system working for me? Is my savings growing? Is my debt getting paid off? So, how do you do invest in yourself first? You do it, by just doing it. You do it by being willing to try a new approach. I always tell my clients, start small and grow tall − increase your contributions gradually over time. It’s a lot easier than you think. And once you’ve done it, you can watch your savings grow and your debt shrink, with little thought or effort. The best place to start saving is in a money market account or a money market fund. Money market accounts are available at most banks or credit unions. Your deposits are insured by the FDIC for up $100,000. They earn significantly more interest than a regular savings account. A minimum balance is usually required. Check writing options are included. Money market funds are not insured by the FDIC. But if you’re willing to take a little more risk they often have higher rates of return than money market accounts. These funds are invested in certificates of deposits (CD’s) and U.S. Treasury bills. Here’s what you can do now: 1. Make saving a priority. 2. Learn more about money market accounts and money market funds. 3. Open a money market account or money market fund. You can check out rates here. If opening a money market account or fund feels too intimidating, open a regular savings account at your local bank. After you’ve done some additional research, transfer the money to a money market account or fund. 4. Start with as little as a $25 (or less) per month and make it automatic. Pick a day of the month shortly after you typically receive income. Gradually increase your savings each month by 1% of your income or $10 a month. 5. Congratulate yourself for taking a big leap towards financial health and happiness!
About the Author Leslie Cunningham, CTACC, “The Financial Dating TM Expert,” has over 17 years experience as a service professional, leading groups, presenting, and helping individuals and couples achieve success. She is dedicated to helping couples build wealthy relationships and turn their money & lifestyle stress into inspired action. If you liked today’s issue check out Leslie’s free articles, teleseminars, and workshops, which offer step-by-step guidance on creating wealth & closeness for couples. Learn more now at http://springwindcoaching.com © 2006 Leslie D. Cunningham Spring Wind Coaching | 7781 Nez Perce Dr. | Bozeman, MT 59715 | Phone 406-586-5561 If this newsletter was forwarded to you by a friend and you'd like to subscribe |
Copyright © Spring Wind Coaching. All rights reserved.