Savings – Start Now!

We all want to save better, don’t we? Those who spend wish they were better savers, whilst those who already save wish they could save even more. Yet in this consumer-driven world, we all want the latest and best immediately. It’s constantly in our faces and we want it. Whether it’s the new car, the expensive watch or the latest gadgets for the home, we’re more than happy to sign ourselves into a finance agreement in order to get it before we can even afford it. It fuels our self-esteem, portrays a sense of wealth to others and provides instant gratification for our hard work.

Whilst there is a clear desire for people to own expensive items, drive nice cars and live in large houses, all this really does is detract from our long-term desire for financial freedom. No matter how much we earn, we’re all caught in the rat race and relentlessly remain slaves to the system.

Let’s take two typical examples; one woman works 20 hours a week at her local supermarket, earning national minimum wage. She constantly worries about whether she’ll have enough money left over at the end of the week to top-up her electricity meter, or put enough petrol in the car to drop the kids off at school before going to work. Another woman runs her own successful business and brings home somewhere in the region of £150k per annum. She is burdened by the pressure of making enough money to support her expensive mortgage repayments, continue to finance the BMW and pay for childcare. Her worries are at the other end of the spectrum, but still they carry the same weight. Both live in stress and fear relating to their finances, and remain overly reliant on their regular income.

The only way to achieve financial freedom is to accumulate funds outside of your regular income. This isn’t to say we should quit socialising and  never treat ourselves in order to save every penny we earn, but even a small change can make a huge difference in the long term. Starting small is a hundred times better than not starting at all.

To make things easy, let’s take a percentage of your regular income, say 5%. Set up a direct debit into a cash savings account and just forget about it. After a few months, you won’t even realise you ever had it in the first place. Allow it to become second nature for you to set aside a percentage of your regular income, and see how your life doesn’t actually change. You’ll still do the same things you did before; eat at the same restaurants, go to the same bars and buy the same £2.60 cup of coffee in the morning. The only difference is you’ve made the first step towards a future of financial freedom.

Once you’re in the routine, set yourself a target of how much you want to save. Saving with a goal in mind ensures that you’ll remain patient and disciplined enough to get there. A good place to start might be to target a cash reserve of 3 x your monthly income. Again, it’s incredibly important to remain patient and disciplined – you’ll never reach your target if you don’t focus on your goal. If you manage to reach this target, you’ll have overcome the first and most important hurdle. This is about making a start and moulding an attitude towards saving rather than spending. It will make all future financial goals easier to visualise and ultimately achieve.

The road to financial freedom is a long one, but it is one you must take in order to be content with the destination. The key with a long journey is – the sooner you start, the sooner you’ll get there.