Saving money wisely is not rocket science. It’s smart and wise but that doesn’t mean it’s easy. It’s not – otherwise everyone would be doing it.
If you think about it, saving money should be thought of as super smart. Who can argue with having money to do with whatever you’d like? Celebrities are lionized for just this thing, but for some reason, the fact that they came upon their money by not saving it, allows it to get pictured as glamorous.
We’ve come to realize that something that can be difficult (saving money) coupled with the fact that there is no money to be made from selling common sense (or wasting money), has conspired to render saving unglamorous. This is too bad.
But, there’s hope…
How to Save Money Wisely
Here are three easy ways to save money wisely. You might not even know it’s happening.
1. Start Early
Yes, I’ve said this before, complete with a picture of our circa 1994 Lotus-123 spreadsheet, our getting started saving early and often was crucial. The earlier you start, the longer your money works for you.
This is so important because the habit gets set and the money has the chance to grow. As you can see from above, we weren’t saving huge amounts but we were consistent.
2. Stay Put and Stay the Course
Life will always bring unexpected changes – job losses, family crises, etc. – but these are all the more reason you should attempt to control the things you can control, now. The house you buy, if you are fortunate enough to purchase a house, has an inordinate effect on the outlook for your long term finances.
Consider buying a house that is less expensive than what the bank says you can afford. Once you do this, consider staying in the house. The compounding effect of not “buying up” and consistently paying off your mortgage can help provide a margin of error when the inevitable “unexpected” happens. And, as we all know, the unexpected usually does happen.
3. Plan Ahead
Well, actually planning sounds too formal and difficult. Really, it’s about thinking ahead. Thinking ahead to next year and what “out of the ordinary” expenses will be coming. Those expenses always show up – new tires for the car, a major house repair, etc. Thinking ahead to the next 10-years when kids may be heading off to college or the next 20-years or 30-years when you may not want, or be able, to work to support yourself. By bringing these future “unknown” expenses to the present, it makes a more concrete and stark contrast for the hard choices of today.
Saving and earning are two sides to the same coin. Ben Franklin said it most succinctly and best, “A penny saved is a penny earned.” Everyone can try to earn more but there is almost always a way to save that same penny. Consider the “future” and on what or how you would rather spend your money today.
What’s your strategy for saving money wisely? How do you decide where to save?
Go Gingham related links:
How we budget complete with categories that spell out FAITH:
More related links:
From The Wall Street Journal, “Simple, Bedrock Rules on Personal Finance” – an excellent resource with rules for managing your investments. These are great rules to live by!
Also from The Wall Street Journal, “How to Live a Happier Financial Life” – not simply what to do with your money but life strategies as well.