A Penny Saved
A Penny Saved
A penny saved is a penny earned- Benjamin Franklin. Meaning it is as useful to save money that you already have as it is to earn more, saving is also another form of earning. Learning or knowing to save is an essential in life that we should all be exercising but it is much easier said than done because it does take effort to not spend your money. Saving is an economy of or, reduction in money time or another resource; preventing waste of a particular resource.
It can also be known a reduction in expenditure or cost, rescue from harm danger or loss, tending to save or preserve, thrifty or economical, or money that is leftover after personal expenses have been met. Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. Ayn Rand . This quote is simply saying it doesn’t matter how much money you make , it can take you wherever you want it to take you but it is truly how you spend or choose to do with your money that is important.
Money will never be able to move itself you have to be the one in charge to move it and place the money where you want it to go, and work for you. It is important to know how and when to save because there are so many benefits that come with saving for example you will be ready to make large purchases if needed, you become prepared for unexpected expenses, your money is kept safe, you are able to take a vacation or be able to treat yourself, and you become able to fund your own education.
Along with all the personal benefits of knowing how to save there are several business benefits that go along with saving for example staying on budget, have the ability to plan and backup your future growth. It is very important to save money within a business because there will always be fixed and variable costs that have to be made regardless of how much the company is making or else the business will be shut down or go bankrupt.
It is important to know how to save and learn how others save and if you notice or acknowledge that you are not saving enough or at all its important to seek help, with a financial advisor, online, other businesses, friends or even free financial planning programs. There are so many personal and business benefits that come along with saving, like mentioned before it’s always good to be ready to make a large purchase if needed, unexpected expenses, and vacation. It is beneficial to save money so you become ready to make a large purchase if needed; examples f large purchases in life are a home mortgage, the purchase of a new car, the purchase of a new laptop, pc, electronic.
The benefit of having money saved is that you wont have to pay hundreds or even thousands of dollars in interest when you have to borrow money because chances are that you have money saved to pay a hefty amount on a down payment or you can pay in cash and wont even have to borrow money. That is another great benefit of having money saved is that you have the freedom that you have the freedom to do what you want to do when you want to do it. Another great benefit of saving is that you are always prepared for the unexpected.
Life is full of surprises and it is best to be prepared for the worst. Situations or examples that could be unexpected situations in life are having an unexpected medical bill, or overnight trip to the emergency room. Another situation is when you are 15 minutes away from work and you are stuck on the side of the highway because your car no longer starts. That’s if you are lucky enough to have a job, you might be unemployed and if that case it is very beneficial to have a savings fund to be able to live off of until you find a job. Savings for any such emergency can give the much needed and required help to overcome any crisis.
Most importantly you do not need to depend on anyone or search for support of others, which at times may never even show up. Another great benefit of saving is that you have the money to get up off your couch and do things, travel, visit amusement parks, museums, and even have time and money to think about your future, maybe even retirement. The benefit of having money saved is that you can easily pack your things and plan and set a date for a trip because you have money in your pockets and you don’t have to worry about how you are going to fund your trip.
The greatest benefit of saving money and the main reason people save money is to be able to treat themselves and their loved ones. It is also very important to save throughout your working life for retirement if you want to live a comfortable and happy retirement life. Starting early to save for retirement gives you a chance to build up a hefty fund needed for once you retire. Those who do not properly plan and save for retirement put a huge burden on their families. As a parent it is your job to protect your children, not to cause them to face their own financial difficulties because they must pay for your retirement expenses.
The real question is where and when does someone start saving, and when is it safe to not save. Saving money or the habit of saving money is the foundation of all financial success, including investing. When does someone start saving, the answer is now, is the time to start saving, yesterday was the time to start saving. The sooner you start saving the more prepared you will be when you need it. Where does someone start saving? One starts saving at home. When you are at your kitchen table making paying the bills and doing the math you need to make, you need to make sure that 1st check you write to is for yourself.
The lack of money is the root of all evil. –Mark Twain. If you can prevent the lack of money you will be better of f in the end. We now know of all the benefits that come with savings and where and when to start saving but, how do we start? Easier said than done right? It is best to have a plan, a set of steps a guide that is easy for you to follow and is custom made to fit your lifestyle. Your first step to begin saving is start with a goal, define your objective, what is the final amount that you want to have saved at the end of 6 months, a year, two years.
Come up with a detailed budget that includes everything you spend your money on gas, food, school, rent, movies. You want to be able to set both short and long term goals for yourself that fit your lifestyle and make sense. You want to set reachable goals for yourself, because you don’t want to let yourself down if you don’t reach that goal. Set a realistic goal for yourself you don’t want to tell yourself you will save $800 dollars a month when that is not possible, you want to be able to pay your bills and have money left over.
Start small all those magazines all over your house, and books, clean and de-clutter cancel your subscription. For example a short term goal for myself would be to save every month $250 and place it in savings somewhere where I will not touch a penny of it. A long term goal for myself would be to save up to a $100,000 in 5 years or less. I think those are both very realistic goals. The next step to saving efficiently is setting a timeframe. Set a specific date for your short term and long term goals so you have a date to look forward to your accomplishments.
Make sure that goal is attainable within that time period. If it is not attainable within that time period you will get discouraged. For example I want to be able to buy a house two years from today. I want to be able to purchase a car and put a down payment on within 6 months. Those are all examples of putting a timeframe to your short term and long term goals. The following step is to figure out how much you will have to save per week, month, or paycheck to be able to reach your saving goal. Take each individual thing or object you want to save for and figure out how much you need to start saving now.
For example if you want to put a $20,000 down payment on a house and you want to be able to save that in 3 years then you know you have to divide $20,000 into 36 months which equals to $550 dollars a month that you have to save to be able to reach your $20,000 dollar goal. If your paychecks amount to $1000 dollars you’re going to start thinking that is not a realistic goal so then you realize you need to adjust your time frame, 3 years is not a realistic goal. Then you change your time frame from 3 years to 5 years and the amount you save monthly changes from $550 to $334 dollars a month to fit your paycheck and your lifestyle.
After you realize your goals and set a realistic time frame you want to keep track and a chart or record or any form of noting your expenses. There is how much money you make and of what you spend and it is smart to take a look at what you spend and how much your spending your money on. You should write down everything you spend your money on for a couple of weeks or even a month, you want to be as detailed as possible not leaving out any small purchases out. It’s good to get into habit of writing down every expense and saving the receipts.
There are also several apps that can help you keep track of your expenses mint. om, splash money are one of the many apps available to help you keep track of what you spend. After you have created your short term and long term goals and you have set a timeframe and you have started recording your expenses you want to be able to take a look at everything and be able to cut down some of your expenses. Once you have started recording everything and what you spend your money on you will be able to see where there is room to cut down expenses. It will definitely be about prioritizing you are not going to be cutting your expenses on rent because that is a fixed cost that you have to make and that is not able to be changed.
You want to be able to calculate how much those cuts will save you per year and you will become more motivated to save money. You want to ask yourself the following questions can you save on gas, are you able to carpool to work or school or whenever you need to get, are you able to get a better price on insurance. You want to consider shopping at the discount racks at clothing stores, items on clearance. Are you able to live without cable or satellite television; are you able to cut down your utility bills? Can you restrict yourself from eating out? Buy food in bulk? Start couponing? Cook more at home?
You might be able to save a lot of money by grocery shopping. Once you have taken a look at expenses that you are able to cut you want to reassess your saving goals and subtract your expenses that are fixed or that you are not able to live without from your income. You want to look at the difference and see if it matches out your saving goal. For example you have decided that you are able to get by on $150 dollars a month and your paychecks amount to $230 month. That leaves you with only $80 to save, if theres no way you can fit all your saving goals into your budget take a look at what you are saving
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 1 December 2016
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