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Saving Money: How to Get Started

Henry Burrrows

What’s the best way to start saving money?

Start saving money.

The most important step to saving money is to start. The second most important step is to keep going. The third most important step is to not rob the bank.

The late great John Savage used to draw two circles side by side. Inside the circle on the left, he would write “spend / save.” In the circle on the right, he would write “save / spend.”

“There are two kinds of people in the world,” Savage would say. “Those that spend first, then save what is left over. And those that save first, then spend what is left over.”

And after a dramatic pause, he would conclude, “These people (pointing to the spenders) always end up working for these people (pointing to the savers)!”

Savage was spot on. If you look for ways to cut spending so that you can “find” money to save, you’ll be perpetually broke. It simply never works that way. It is just human nature that most of us increase our lifestyles to match (or exceed!) our incomes.

Everything in our consumer driven culture encourages and rewards that behavior.

But if you don’t break that cycle… that cycle will break you.

So step one is to save…just save. Take a predetermined amount of money each month and put it in a savings account. If you are not saving any money now, start saving five percent of your income. That’s not enough, but it’s a start. Do that for six to twelve months to prove to yourself that you can do it.

Then…up the ante to ten percent. Do that for a year and increase it again to fifteen percent.

Will that cause some economic stress and pain? Yes, because if you are like most people, you are used to spending everything you make, plus a little.

But any economic stress and pain caused by implementing a savings habit pales in comparison to the horrific pain of retiring (by choice or by force) with insufficient funds to live on.

So, step one is to start. Step two is to keep going (and even growing) your savings.

The final step is to not rob the bank.

People lie to themselves all the time by calling something a savings account, when it is in reality a “put and take” account. In order to make progress towards financial independence, you must make a commitment to long-term savings. Saving money for four months to buy a big ticket item is still just consumption on the installment plan (not savings).

The best way to start saving money…is to start. Then keep going. Then don’t rob the bank.

Byron is a Certified Financial Planner and Managing Director of the Planning Group at Argent Advisors, Inc.
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