Dear Ash Cash,
Why should you save money and secondly How can you
save money?
The answer to Why should you save money is very simple… Think about
the future! Those who fail to plan also plan to fail. Saving money is
important so that you can be prepared for any of the emergencies and
obstacles that life may throw in your way. It is also important to
save because at some point after working so hard you are going to have
to retire. You want to make sure that when you retire you have money
saved so that you can continue to live the lifestyle you want to live.
lastly you want to have money available to make some of the big
purchases like a down payment on a house or buying a car, etc;
To the question of How to save money? I say treat yourself like the
IRS. When you work a 9-5, the IRS automatically takes whatever your
tax rate is out of your paycheck before you see it. You have to treat
yourself this way, so every time you get paid make sure you put aside
10% of your money into an account. The best and most effective way to
develop this habit is to make it as painless as possible. There is a
saying ³out of sight, out of mind² if you make it automatic and make
it invisible, you will create the habit without it even disrupting
your day to day life. If you receive money via direct deposit, take
out your savings before you receive it, you¹ll never know it¹s
missing. If you receive income in the form of a check, then have
automatic deductions come out of your bank account on a monthly basis.
In order to avoid the temptation of using the funds for everyday
purchases, you should open a separate bank account at an institution
other than the one you keep your primary account in. I suggest a high
interest savings account at a bank like ING Direct or FNBO Direct.
Because these banks have little or no physical branches, it limits the
access to your account, making it easier for you to save, while
receiving a reasonable interest rate.
