One Good Thing To Do With Your Money Right Now!
Look out your window. Do you see it? It's the sky, and it's about to fall right on top of you.
At least, it would be if you believed the media.
People screaming in the streets....
.... no food!
...... no fuel!
....... no water!
...... no money!!! Aargh!
Regardless of the Time
In our own personal finances there are things that anyone can do, all of which make a major impact on how your life will play out. They are hard to do and scary for some, but can truly make a difference regardless of whether or not the proverbial sky is falling. Any trip to a local library or bookstore will lay out for you reams of books that are all written to bring you to this sacred knowledge. Are you ready?
In the most recent information put out by the Department of Commerce, in the last 8 years, Americans are saving less and less each year. As it stands right now, even considering this last quarter with an increase to almost 3%, is it any wonder that some of us are in a state of frustration or outright panic?
Without savings in the bank, what type of security do you have?
My guess is, little to none, if you are an average American.
What can I do?
"For there is a proper time and procedure for every delight, though a man's trouble is heavy upon him." (Ecclesiastes 8:6)
A well stocked savings account, sometimes known as an "emergency fund", can provide benefits that are both psychological and financial. In fact, when it comes right down to it, the psychological is probably the better of the two!
Regardless of when you start saving, "now" always qualifies as a good time. There are any number of ways to start, but if we first can determine that it is an important thing to do, it provides more focus, determination, and drive to see it happen.
Yes, it can be easy to feel overwhelmed, so to help erase that feeling, we have to get a handle on where we are at financially. That involves looking at our present circumstances and establishing an awareness of our current income and expenses, and with that, we can create our goals.
Put some thought into it
The simplest way to begin is by setting realistic and honest goals. These should be based not so much on what we think but more on what we know about our present circumstances. Ultimately you can put away into savings as much or as little as you would like, but conventional wisdom says that it should be enough to cover your day to day living expense for the next six to twelve months.
The typical expenses that you will want to account for are those that will keep you sheltered, fed, and healthy. For most of us those costs can be readily determined by looking over our fixed and variable expenses.
Ask yourself general questions like these:
For example, write down ( or research it if you don't already know ) your monthly fixed expenses like rent, mortgage, car loans, and the like. Anything that you have a monthly obligation to pay but the number doesn't fluctuate at all.
Second, determine your "life" expenses. These are the things that you have to pay for in order to live ( or at least life comfortably enough ), such as groceries, utilities, and fuel. Things that you pay that are not the same necessarily month in and month out, but that you have to spend money on.
Third, determine what would be an average of your payments for things like credit card balances due. Assume that you will be paying the minimum plus an additional 10-15%.
Add these up as representing one month's total living expenses and then multiply this number by 3, 6, and 12.
These should be your goals for the amount of money that you need to set aside in a safe place where the money won't be touched or spent except in an emergency. Anything beyond that is up to you, but likely unnecessary.
The things that you don't want to take in as expenses are those things that fall into "luxury" such as snack runs to Panera, weekly outings for Chinese food, or other non-"life" expenses. Sure, you could make an allowance for these in your emergency fund if you really think that you can't give them up. But remember, the point of an emergency fund is saving for a time where you might be unemployed or without income for a stretch of time. This money is only to be used for those purposes, and buying a six dollar bowl of soup doesn't really qualify.
After you have that figured out, the goal becomes putting a plan in place for funding your account and then sticking to it.
We will look at that in my next entry, but until then...... get out those pencils !
At least, it would be if you believed the media.
People screaming in the streets....
.... no food!
...... no fuel!
....... no water!
...... no money!!! Aargh!
Regardless of the Time
In our own personal finances there are things that anyone can do, all of which make a major impact on how your life will play out. They are hard to do and scary for some, but can truly make a difference regardless of whether or not the proverbial sky is falling. Any trip to a local library or bookstore will lay out for you reams of books that are all written to bring you to this sacred knowledge. Are you ready?
- Don't spend more than you make
- Don't borrow money
- Save some of what you earn
- Invest wisely
In the most recent information put out by the Department of Commerce, in the last 8 years, Americans are saving less and less each year. As it stands right now, even considering this last quarter with an increase to almost 3%, is it any wonder that some of us are in a state of frustration or outright panic?
Without savings in the bank, what type of security do you have?
My guess is, little to none, if you are an average American.
What can I do?
"For there is a proper time and procedure for every delight, though a man's trouble is heavy upon him." (Ecclesiastes 8:6)
A well stocked savings account, sometimes known as an "emergency fund", can provide benefits that are both psychological and financial. In fact, when it comes right down to it, the psychological is probably the better of the two!
Regardless of when you start saving, "now" always qualifies as a good time. There are any number of ways to start, but if we first can determine that it is an important thing to do, it provides more focus, determination, and drive to see it happen.
Yes, it can be easy to feel overwhelmed, so to help erase that feeling, we have to get a handle on where we are at financially. That involves looking at our present circumstances and establishing an awareness of our current income and expenses, and with that, we can create our goals.
Put some thought into it
The simplest way to begin is by setting realistic and honest goals. These should be based not so much on what we think but more on what we know about our present circumstances. Ultimately you can put away into savings as much or as little as you would like, but conventional wisdom says that it should be enough to cover your day to day living expense for the next six to twelve months.
The typical expenses that you will want to account for are those that will keep you sheltered, fed, and healthy. For most of us those costs can be readily determined by looking over our fixed and variable expenses.
Ask yourself general questions like these:
- What is my monthly rent / mortgage ?
- What is my average monthly grocery bill?
- What is my average bill for all of my utilities?
- Do I have any additional expenses like insurance premiums or credit card payments ?
For example, write down ( or research it if you don't already know ) your monthly fixed expenses like rent, mortgage, car loans, and the like. Anything that you have a monthly obligation to pay but the number doesn't fluctuate at all.
Second, determine your "life" expenses. These are the things that you have to pay for in order to live ( or at least life comfortably enough ), such as groceries, utilities, and fuel. Things that you pay that are not the same necessarily month in and month out, but that you have to spend money on.
Third, determine what would be an average of your payments for things like credit card balances due. Assume that you will be paying the minimum plus an additional 10-15%.
Add these up as representing one month's total living expenses and then multiply this number by 3, 6, and 12.
These should be your goals for the amount of money that you need to set aside in a safe place where the money won't be touched or spent except in an emergency. Anything beyond that is up to you, but likely unnecessary.
The things that you don't want to take in as expenses are those things that fall into "luxury" such as snack runs to Panera, weekly outings for Chinese food, or other non-"life" expenses. Sure, you could make an allowance for these in your emergency fund if you really think that you can't give them up. But remember, the point of an emergency fund is saving for a time where you might be unemployed or without income for a stretch of time. This money is only to be used for those purposes, and buying a six dollar bowl of soup doesn't really qualify.
After you have that figured out, the goal becomes putting a plan in place for funding your account and then sticking to it.
We will look at that in my next entry, but until then...... get out those pencils !
That was great. I think we all need to take responsibility for our finances. It's hard to say that we're going to do without for now so we can be secure later. Now is a great time.
Reply to this
Thanks for your comments Allison. I am hoping that more people will begin to see the effect of savings in cash as a necessary part of their financial well being. ( And keep the cash in an FDIC insured account with a great company like ING who can help grow your money as well ! )
Reply to this