Learn How to Start a Savings Program
Today many people are facing economic hardships, not because they are living beyond their means, but rather because they never learned how to save for a rainy day. A good rule of thumb for businesses is to have enough of a financial cushion to sustain a company for six months to one year. This protects the business against cash flow problems caused by situations beyond their control such as economy down turns, disasters and even personal tragedies. If you do not have this financial cushion protecting your personal finances, then it is a good time to start building your nest egg.
Step #1 – Open a Savings Account
A good first step is to open a saving account to hold your savings. Having this money in a bank will reduce the chances that you will spend it. Look for a savings account that has no fees and that pays a good interest rate (if you can find one).
Step #2 – Establish a Monthly Budget
A budget will keep you from spending more money than you have to. It will also help you to identify areas where you can reduce monthly costs and to identify extra money that can be earmarked for savings. If you have extra money each month, assign a percentage of this extra money to be put into your savings. You may be surprised how quickly your savings can grow if you add to it a little bit each month. At first you may only have one or two percent of your monthly income to save, but later on you may be able to save 10% or more per month.
Step #3 – Save Your Change
One of the biggest wastes of money is not using your change. Every purchase you make with cash you get change. This change can get lost in your purse, your pants pockets, your car and in various locations throughout your home. Instead of absent-mindedly dropping your change somewhere, place it in a jar and deposit this change in your savings account at the end of each month. This can add anywhere from $10 a month to over $100 a month, depending on how much change you accumulate in a month.
Step #4 – Find New Sources of Income
If you are serious about creating a savings nest egg then consider finding a new source of income. Then deposit all of this income into your savings. For example, you can take on a second job, you can start recycling or you can start a small home business.
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