How to Start Saving Money
Raise your hand if you think the words “saving,” “investing,” “retirement” are sexy words? Anyone? Anyone?
How about having a nice cash cushion in your bank account, how do you like the sound of that?
Today I was speaking with a colleague, and she wanted to find out how she can save $10,000 in 12 months. She just graduated from University, lives at home (and pays her Mum a small rent), does not have a car and has a small student loan.
Let’s keep things simple. We can go into a variety of formulas but when it comes to saving, I like to pay myself first.
What does that mean? Before my bills get paid, I take a small percentage, every payday, and put this in a separate bank account. So let’s go back to my colleague, we will call her Sarah. Sarah makes $40,000 a year as a digital researcher and has little debt. She takes public transportation and has a $8000 school loan.
The easiest way to save 10 G’s is to take $10,000, divide this by the 26 paychecks we receive each year and have the bank automatically move this money to a separate savings account. So in Sarah’s case, this bi-weekly savings is $384.61.
That's it. Now she is on track to save. In the meantime she also takes $200 a pay and places that on her school loan. So in 12 months she will have $10k in the bank and nipped off $4,800 on her school loan. If she decides to take $3,200 from the $10k of saving to clear off the load she can do that as well. The whole point of this exercise is to have options.
How do you make saving a priority? Share your thoughts below.