Friday, October 8, 2010

Leading Change – You Must Save Money

“To be content with little is difficult; to be content with much, impossible.” – Marie Ebner-Eschenbach

This post is the last of my series on leading financial change in your home. I think this post is one of the more important pieces of changing your financial picture, but the truth is that you really have to do all 4 parts in tandem. You have to be accountable, you have to want to change, you need a budget and you must save money.

Here is a nice little video from CBS  news with some tips for saving money:

I like to think I know my readers and I am fairly certain none of these tips really rocked your world. But if you already know all of the quick tips, why is it so important that you start saving?

Well it really comes down to one over-arching concept: It’s going to rain.

Some of you are in California where it rains twice a year and they cancel school when it does. But for the rest of us, precipitation is pretty much guaranteed monthly. Life and finances are the same way. One year it might be like living in Cali – only a couple car repairs and one trip to the urgent care. Other years it’s like Seattle – you better have a poncho because the hits just keep on coming.

A funded savings account will act like an umbrella when the storm hits. If you are embarking on changing your financial picture the first step has to be establishing an emergency fund. It might sound backwards but is the single most important thing you can do to ensure success.

For example, if you are trying to pay down credit card debt and an emergency comes up (which they always do) what will you do if you don’t have an emergency fund? Put it on the credit card! Which is completely defeating and you will likely quit your attempt at a change. Don’t let it happen to you!

It really is as simple as it sounds, pay yourself each month. Set up a payroll deduction to your savings account for $50 each paycheck and in less than a year you can have a nice starter emergency fund. If you want to change your finances, you have to start here.

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