Ever feel that there’s more month at the end of your money instead of money at the end of your month?
One of the biggest money complaints is that people often don’t know how to save, they feel as though they can’t save, or they get to a $1,000 and then spend it and go around and around in circles and don’t get anywhere financially.
Saving money regularly cannot be understated. It’s one of the biggest fundamental basics of good money management. We all must save some for tomorrow, save some for a rainy day, save some for bigger purchases, save some for a home loan deposit etc.
The problem is, most people just don’t know HOW to save.
To try and save money after expenses doesn’t work, because when money is in our bank accounts, we generally spend it. That’s just how it works. That’s just how life is. Good intentions, we all want to save but unfortunately if something pops up like a bigger bill or an unexpected expense, or you just have a great time at the weekend, saving often doesn’t happen, so you need to do it differently.
Ask yourself, why do you work? To be able to pay your living expenses and have the lifestyle you want of course! However, if you don’t save first, then in essence, you are actually working to pay the tax man first, and the bank, and the landlord, and the grocer, and the utilities companies and other companies and people in a long line, before you get a slice of the action. That’s no good. You work for you so you should be paid first.
Let me share with you one of the most amazing financial secrets I’ve ever learned. This is a game changer when it comes to money. It’s the foolproof way to save money, easily and without even thinking about it. Ask any one that is good at saving, or good with money, or wealthy and they will tell you this is the way the NUMBER ONE way to save money, especially if you want a simple, set and forget system.
I’ve been using this strategy for many years and shared it with some of my close friends and family (and those of you who have read my book of course!). The people that chose to implement it have had great success. It works for everyone!
The secret to saving is to Pay Yourself First, not last. Pay yourself first always.
You must open a bank account specifically for your savings. You cannot save into your everyday bank account and mix up all of your money in one account. I’ve done a video on the importance of having different bank accounts and why you need to structure it that way (watch it here). The best way is to use an account that’s held with a different institution to your everyday bank account – an account that you can’t see it very often. Online only accounts are great because you don’t necessarily need ATM access for your savings.
Calculate 10% of your income. 10% is best. It’s the minimum, however, you can do less if you want but 10% is tried, tested and proven to work for everyone! Better yet, save more – save 20%. A healthy budget should allow savings of 20%, but the minimum is 10%. As an example, if your income is $1,000 per week, 10% equals $100.
Set up an automated bank transfer to transfer 10% of your income to your new savings account. The transfer needs to lodge the day AFTER you are paid. So, if you are paid weekly on Wednesdays, set the bank transfer lodgement for Thursdays. Or, if you are paid fortnightly on Thursdays set it to lodge fortnightly on the Friday. Always the day after your payday to allow a grace period for banking transaction times but so that the lodgement occurs BEFORE you have a chance to spend your money.
Now, do this religiously and without fail! Every single time you are paid, you must to pay yourself first. Automating this means you don’t even need to think about it. This is the way to save. Save first. Spend second.
If you are paid different amounts each payday you can calculate and manually transfer your savings too. Regardless if you do it automate it or not, just be sure to pay yourself first. Don’t do it after you’ve paid rent, or after you’ve paid your mortgage or after you’ve bought groceries etc, it must to be done first.
Of course, most people in Australia are paid by their employer after tax, so the tax man will still be paid first but then straight away you have to pay yourself first from the income you receive in the hand, before you pay any of your other living expenses.
If you are worried that you can’t afford to save 10% because you need all of your income for your living expenses right now, you spend everything you earn, trust me, if you implement this foolproof saving strategy you will not even notice the money going out from your bank account. Psychologically we only spend what we can see. If you move the money away from eyesight first you’ll only spend what’s leftover. If your budget is tight you will automatically make concessions along the way so that you can afford your expenses. If we see it we spend it, but if we can’t see it then we don’t even notice it.
Consider this, if the government all of a sudden put tax rates up by 10% you would have to pay it, so, pretend that’s happened now and instead save that 10% for you.
Hands down, this is the best financial strategy I’ve learnt and it has served me well. I call it the 10% Savings Rule. You work for you as a priority and not for anyone else, so you must pay yourself first and save more. Try it out and really watch your savings balance grow!
Please do me a favour and share this! Everyone needs to save more and I know you know someone out there that would like to know this life-changing savings strategy. Go on, change someone’s world.
Click here to watch the video!
Disclaimer: This information provided is general in nature. It is based on the knowledge and experiences of the author and not intended to be taken as financial advice. It does not take into account the objectives, financial situation or needs of you or any other particular person. You need to consider your financial situation and needs before making any decisions based on the information. You may have to modify the information and do further research, for it to suit your personal financial situation. Therefore, before acting on the information, it is recommended that you consider its appropriateness to your circumstances or consult a financial adviser, tax advisers or legal professional to assist you in doing this