Millions of Americans have a problem and that is saving up money. For these same Americans they have a weakness that compounds the problem and that is over using credit. There is room between what you earn and what you spend in which you can save up money, the key here is to make that gap as wise as humanly possible. In between “what you earn” and “what you spend,” there is a gap. The only way to increase this is one of two ways, make more money or spend less money.
For many of us making more money is the harder path to take. Yet the more income you make the easier it is to save income towards savings accounts and emergency rainy day funds and not to mention retirement accounts. It is vital to try and increase your income every year. If your job is not handing out raises you might do well to consider getting a job at a rival company that is willing to pay more. You could also try and increase your skills making you a more valuable employee. Your financial options increase with every $2500 per year increase in earnings. For those who are single it may be time to consider marriage with the right person since two incomes will turbo charge your finances. Two people can combine incomes and live almost as cheaply as just one income and this of course allows for more savings. You even get a tax break for being married.
If you do increase your income you will need to pay ever close attention to the gap between what you earn and what you spend. Resisting the urge to increase your buying power is vital here. The key is to keep your expenses and spending at the same level as before the increased income and then diverting that extra income into savings and/or paying down any debt such as student loans, auto loans or a mortgage.
For millions of Americans that overuse credit millions of dollars go towards interest payments on things these same Americans never needed in the first place. I had one client who had ran up $5800 in debt and this was just the principle, not even counting the interest on senseless purchases.
Many financial writers talk about the merits of budgeting. Yet few people succeed at budgets. You could try the Anti Budget. This is where you set aside a certain amount of income such as 15% to 35% to go into savings then you are free to do what you want with the excess that remains. You can spend away after your allotted savings for the month are accounted for guilt free. Of course out of this money you will have to pay your bills. Also avoiding new bills such as charging frivolous things to the charge cards will help. When you take your savings off the top your setting yourself up for success.
You do not need to clip coupons and go on extreme penny pinching binges. Yet you should save at the minimum 20% of your income into savings. An ideal amount to save would be half of your income. This is easier when you raise your income of course. Those who manage to save half of their income often find that retirement is easier and much more secure than those who saved the bare minimum or less.
Saving sounds great but what exactly do you save for? Retirement for one. Over half of all U.S adults entering retirement are under prepared savings wise to retire comfortably. You can also save money for passive income investments such as rental properties, stocks, bonds and more. The more you invest the better your life becomes, and it is only possible with saving money and learning to increase your income through any legal and honorable means possible.
No one said the road and the path are easy. There will be bumps along the way towards success. The one thing I have learned from my own life and from other successful people is that you have to want it.