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The Power Of Saving - By Cindy Diccianni |
The Power Of Saving - By Cindy Diccianni
How you save your money is just as important as how you spend your money. After all, they really do go hand in hand. You may recall the adage “Pay yourself first”. Let’s discuss the concepts related to saving money and start you on the road to “Financial Freedom”.
Your Approach To Savings
The ability to save relates in part to your perceptions of money. If you have learned to appreciate money, you will think abundantly, reward yourself by developing reserves and saving for the future, put your needs before your wants and control your spending on luxury items. These thought patterns and behaviors demonstrate respect for your money. And as you increase your respect for money, your money will increase for you.
It is important to develop good saving patterns while you are young. Teach your children to save for their future by putting small amounts (up to half) of their allowances in a passbook or statement savings account. And teach them not to touch it. Explain how money increases over time through regular interest payments. By showing them this positive aspect of savings, you will reinforce the importance of slow, consistent savings.
College Years
Start to save for your children’s education when they are very young. There are several ways to do this: 529 college plans, educational IRA’s, investing assets in mutual funds and a savings account. Additionally, it is important to teach your children that their education is an investment in their futures.
As the college years approach, it’s even more important that you and your children understand the power of savings. Credit card companies bait young teens with credit card applications in college - and so begins the cycle of debt. It is very easy to use these cards creating higher and higher credit balances due and then suddenly realize that in addition to your tuition debt, you now have debt for additional expenses. Teaching limits for yourself and your children and saving for your education and their educations, helps to reinforce the power of saving and the value of money.
Marriage Years
Before you know it, you’re in the marriage years, whether yourselves or your children. It is so very important that you have started the power of savings before now. Life moves quickly and there is little time to catch up, this is why it is vitally important that you develop a savings plan early on. You then need to buy homes, cars, furniture, vacations - just to mention a few expenses - and support yourself and a family. It seems that you constantly work to pay bills and taxes. If you have a good savings mentality and a viable plan in place prior to this point, than all of these expenses will get paid, you will always have money in reserve and never feel that you are endlessly behind and constantly trying to catch up. Your children also learn by example; they pick up everything like a magnet and will develop the pattern of savings that you use.
As you can see the saving cycle starts at birth and progresses throughout our lifetime.
Tools For Savings
The most important aspect of savings is to start now if you haven’t started yet. We were not taught to save. In your parents generation times were different and many of them had immigrant parents who literally worked until they died. We now live longer and work harder than ever before. It is imperative that we develop a plan for saving and follow it through with due diligence.
Savings tools include:
* Pay yourself first. Save at least 10% per pay. If 10% is too much, start smaller and work your way up.
* Put money in your company’s retirement plan. Take full advantage of any match money available; it is found cash.
* Save additional money in a money market account for an emergency.
* Keep accurate records of how much money flows in and out of your home. You should know how much money in fixed bills (needs based bills, rent/mortgage, food, car expenses, utilities) you need every month. This money has to be there to survive.
* Know exactly how much additional money is available and identify how it is spent every month.
* Pay down debt and get rid of it. Eliminate credit cards and pay cash for purchases. Be aware of how you spend your money. Avoid waste.
* Insure yourself and your family for catastrophic loss-death, disability and health to protect your savings.
By following this process, you can now develop a plan of action to save more and spend less. Make good financial decisions and seek the advice of a Financial Advisor for those aspects of investing that you do not understand. Reward yourself in the future by planning today!
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Cindy Diccianni is a Registered Nurse, a Certified Senior Advisor (CSA), a Registered Investment Advisor and a Registered Representative with Leigh Baldwin & Company member NASD and SIPC. She is affiliated with Ortner, O’Brien & Ortner Advisory Group, Inc. and co-founder of Nurturing Your Success, Inc. Her passion is assisting clients in creating the financial freedom they dream of. You may visit Cindy at www.nurturingyoursuccess.com or write to her at Cindy@nurturingyoursuccess.com. You may also call her directly at (610) 251-9393.
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