As a society, we have been taught to spend every penny we make, to live paycheck to paycheck, often beyond our means, to get it now and pay later. For many of us, these habits are destroying our chance of having any sort of financial freedom and financial peace. It’s a trap and it’s time to get out.
The secret to Financial Freedom is to “Pay Yourself First” and that means saving.
Tip: Now would be a great time to go back and listen to Money Tip #5 to identify what you need for your “Money Cushion” and Tips 1-4 on how to create and find more money.
There are 3 simple steps to this process:
2. Identify how much you want to be saving. This should be a specific percentage of every single penny you bring in. Shoot for 10% minimum, but if you can do more, that’s great!
3. Set up your Saving Categories or Money Buckets. This is why you are saving this money and what it will be used for.
So this is how it will actually work for you. You will go to the bank and open just one savings account. You will pick the percentage that you want to save from every check you receive. Then you will deposit to the savings account, and track it for your specific money goals or money buckets.
Here are a few tips:
- The key is to start a savings plan even if you have debt. We have a very simple process for paying down your debt and while you are doing this, you are also saving and building up your money buckets.
- Create Your Money Bucket Form. You will create categories for and short term savings goals you might have.
- The first money bucket category one you will want to set up is your Emergency Fund or Money Cushion. Your goal is to be putting something away from every check until you have 1 month’s worth of expenses set aside. Then you work at 2 months, then 3 until you have six months saved up.
- Pick out your other Money Bucket categories. These could be saving for a car down payment, or repairs, holiday shopping, family vacation, etc. The key is to save this money rather than put it on a credit card and then have to make payments and pay interests. You are changing that cycle.
- Go back and do Money Tip #5 and use the Expense Tracking Form. You will want to identify how much of a Money Cushion you want and this should be equal to “one month of living expenses”. You will identify this number by completing the exercise from last week’s tip.
- You will be saving a specific percentage from each check. If your goal is 10%, then if your check is $1000, you will save $100. It your check is $100, then you will save $10.
- Use your Money Bucket Tracking Form to split up and track how you are saving. For example. If you have $100 to save, you can decide how you want to break that up. It could be $50 to Money Cushion, $25 to Car Fund and $25 to Vacation or Holiday Fund. You get to decide and then you total the numbers at the bottom. This way you only need one savings account and the Money Bucket forms tells you how much you have for each Goal or Money Bucket!
- If you would like step by step help with all of this and ready to go tracking forms – including our debt payoff plan and money bucket tracking form, then be sure to listen to the Free Clearing Money Clutter call by clicking the link below.
Paying yourself is a gift to you. This way if you get sick, or lose your job, or business slows down, or you have unexpected expenses or decide that you have to leave your marriage; you will have a cushion – a money cushion. This will help you sleep at night and have more confidence and more freedom!
There was a time when I was pregnant and my husband was unemployed and we were paying one credit card with another and we could have lost our home. After that, we vowed to always live on less than we made and we now have over one year’s worth of living expenses in savings. That’s above and beyond our investments. It’s taken us 20 years…but that’s financial peace. You have to start somewhere, even if it’s just $10/week.
It’s not the amount you are saving, it’s the action. The action itself will raise your energy level, your confidence, your self-worth. And remember, “Your Self-Worth = Your Net Worth”. So spend less than you make and pay yourself first starting today!
What do you do next?
- Schedule time to do this exercise.
- Follow the steps above.
- And be sure to go back to Money Tip #5 to identify your Money Cushion. We have given you a special form for that exercise!
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For more support, please join our FREE Teleclass called, Clearing Money Clutter: From Chaos to Clarity where we will take you through our five step process to creating wealth and stepping into your money power!