Baby Steps: Saving Money

Baby Steps: Saving Money | Whether it's something you want (NormaTec Recovery boots) or something you need (house painted), things cost money, and often a lot of money. Most people don't have a huge savings account just sitting there waiting to be spent. Whether it’s something you want (NormaTec Recovery boots) or something you need (house painted), things cost money, and often a lot of money. Most people don’t have a huge savings account just sitting there waiting to be spent.

In today’s world, many people just charge these things on a credit card and then worry about paying it off later, but most of those people are also broke and in debt up to their eyeballs which is stress added onto stress.

So I have a better idea! Save for what you want (and need). Like the olden days where you don’t buy something unless you have money for it! I know that sounds boring and impossible, but buying something you actual have money for is far from boring, in fact, it’s exciting. And saving up for that thing is very possible.

When I was 12 years old I really wanted this pastel blue Swatch sweatshirt. It cost $30. Keep in mind this was the early 80s and we were poor. Most of our clothes were hand-me-downs from our babysitter and my allowance was $2 a week.

But I HAD to have that sweatshirt, so I saved my $2 a week for 15 weeks and walked right into Joslin’s and paid for it!

As a waitress in my late teens and 20s, I really began to see the act of saving for something add up.

I used the “envelope system” for my budget since I was paid cash every day. The things I had to pay for (rent, utilities, school loans, etc) were the first set of envelopes marked with how much I needed to make each day to make the payment each month.

The next set of envelopes were the things I was saving for that I needed (car, insurance, family visit, etc), the next were what I wanted short term (clothes, shoes, movies, out to eat), and the last were what I wanted long term (money for Christmas presents, snowboard pass, vacation, etc).

As you can see I was very different then!!

Each day I would come home from work with a wad of cash and distribute it into my envelopes. After the necessities, I would start putting money into the other envelopes. On the days when I made a lot of money, even the very last envelope would get a few bucks!!!!

Over time, this would add up and when I grabbed my Christmas shopping envelope to buy presents, it would have $500 in it! Where did all that money come from? It was a couple dollars every day for a year! And yes…that came to $500!!

These days I don’t earn cash, so I have a list of all the things I am saving for in the foreseeable future.

These include things I want (the recovery boots I mentioned, races, massage, trips, tattoo), things I know I will buy anyway (running shoes, bike tires/tubes, swim suits, registration for Kona), things I will need in the future (phone, computer), and things I don’t want to spend money on but know I need to at some point (painting house, AC).

Each week when I do my budget, I allocate a percentage of my income to these things I am saving for (10%) and divide that amount by the number of things I have on my list (20) and put that amount toward each item on the list. Some weeks that amount is $5, some weeks that amount is $2. BUT IT ALL ADDS UP!!!!

For example, in 2012 when I really started focusing on my dream of racing the ironman in Kona, I added it to my list. By January 2013, the year I was going for it, I already had over $200 in my “Kona fund”. By the time I qualified (September 22) and had to pay for my entry, I had $422 saved. Now granted the entry was more like $800, but I had to pay it then and there if I wanted to accept the slot, so I charged the other $380. BUT if I didn’t save up the $422, I would have had to charge the entire $800!!! And this was seriously by saving $2-$5 a week!!

Think of how many times in a week you waste $2-$5. Off-hand I can think of at least 5.

So here is your homework…

Write down something you have really wanted but kept saying “I can’t afford it”. Over the next week write down every penny you spend through the week. See where you can take $2-$5 away from something not as important (drink at the gas station, fast food, cigarettes, alcohol, going out to eat, coffee, soda, the gym membership you haven’t used in 6 months, the online subscription to something you can’t even remember, the atm fees, satellite tv, etc) OR if you really can’t (or don’t want to) cut any expenses from your life, pick up a little job a couple hours a week, all you need to do is make $2-$5 so it can even be pet walking or lawn mowing or direct sales or even selling stuff on eBay or Amazon.

Now start saving and go and get that thing you want!!

PS This works with getting out of debt too. Paying down a few dollars on a consistent basis over time pays off debt!

PSS Have fun and work for something you REALLY want!!!

Keep me posted!!

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www.facebook.com/groups/FinancialFreedomROCKS

See you soon!

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