Fresh Finance: Road to Riches

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About a month ago, I asked you several questions regarding your savings in an article titled “To Buy or To Save?” Now, I want to touch back on that article to see if you have made any changes in the way you handle your money.  Have you saved anything since reading that first article? If so, how much and was it in line with how much you wanted to save?

In order to get anywhere, we have to have a good sense of where we have come from and where we want to end up. I always hear people saying they want to be rich but I often find most people don’t even know where to begin. They have no savings, they have no financial goals, and they have no financial discipline. Now that you are embarking on the road to saving more, let’s turn our attention to goal setting by establishing how much you want to save each month, each year and eventually for the next few years to come. It’s like laying the gravel and the sand for what will become a future highway to wealth.

When I first started thinking about saving a lot more than what I currently was, I figured the best way to do it was to start with a short term plan. I asked myself how much money did I want to save by year end. My answer was based on some other financial goals I had in mind including investment opportunities, paying off credit card debt and just reaching a personal milestone in terms of having a certain amount of money in the bank at once. By answering these critical questions (and writing down the answers) I was able to narrow my focus and hone in on a savings plan that not only fit my overall plans but also my financial budget.

So, let’s say I decided I wanted to save $500 a month. That meant I had to figure out a way to save an average of $125 a week or $250 every two weeks. Depending on how your income trickles in, weekly, bi-weekly or monthly (and how you set your budget up) will depend on how you set your financial saving goals. Anyway, once I had that mental breakdown, the next step was to put ‘Savings’ in my monthly budget with the corresponding amount of $500 that I wanted to save. Cracking that mental barrier was tough because I thought of the million other things I would rather do with that money. But, I knew deep down inside what I really wanted was going to take a lot more money than what I actually possessed. The only way to get to that next level was to start saving today.

The next step was moving from idea stage into action mode. The next day at work I gave instructions to payroll to automatically deposit $250 of every paycheck into my savings account. If I did my math correct, I would stand to save $6,000 over the next 12 months without lifting a single finger. That didn’t even include my 401(k) contributions maxed out and all my other budgeted expenses including monthly entertainment and shopping. Every single time I got paid, the money was automatically deposited so I never saw it, I never missed it. I simply saw a deduction of $250 right along with my taxes, 401(k) and life insurance deductions. Don’t worry; you will learn to live without that extra money each pay period and just to help you take your mind off of it I recommend using an online based savings account. Not only are they FDIC insured, they also pay great rates in monthly interest.

I don’t suggest you just start off saving $500 a month right off the bat. For one, everyone’s budget doesn’t allow it. Second, you need to sit down and configure a budget to know what you can afford and what you can’t. You can’t build a house without nails and cement. Once you have done the latter, take a leap of faith and instruct your payroll office to start deducting funds automatically next pay period. Most companies can make deductions for up to six separate accounts at no extra charge. Even if its $20 every two weeks, you will get a kick out of watching your money grow untouched.

My grandfather always says “I can lead you to the water but I can’t make you drink it.” With that, I have left you with the tools to repair and improve your financial picture, but I can’t make you pick them up and get to work.

Let’s Get Wealthy!

Tagged as: budget, personal finance, wealth

Article by Kevin Breckenridge

Helping to raise the financial conscious of those who are consciously aware of the necessity to obtain financial freedom. Through education, exposure, open discussion, and action we can eliminate the financial strain on our pockets. Doing so will allow us to build the capital and asset portfolio necessary to truly enjoy our life as well as elevate the launching pad for our future generations. Follow me on Twitter @Legacieinmotion

Kevin has written 32 article(s) for us.