Credit cards are tempting. Credit card companies are….very profitable. The difference between middle class families that build wealth over time and those that fall more and more behind could come down to a simple scientific fact: Percentage and persistence.
Families who make savings non-optional and focus on a saving a dedicated percentage of their after tax paychecks every time they receive a paycheck tend to grow savings first and then assets. Of course, growing performing assets is the critical fire for wealth production just as debt is the #1 impairment of savings and wealth growth in the middle class.
The key is percentage + automatic savings + regular focus on saving and moving money from checking to savings vehicles along with steady investment. Checking accounts are money laundering accounts for other people’s money. To build wealth, you must save regularly and you must build produce assets. But you must build the proper emergency savings fun before you even think about investing. That does not often happen with people who don’t make saving money with each paycheck a priority.
What is a good percentage to save regularly? 20%. Don’t gasp. You can do this. If you have to, begin with our 1% Savings Plan. Don’t know about that? Check out past blog entries and you’ll pick it up pretty quickly.
You can pay down debt. You can surrender a percentage of every paycheck to savings. You can mark time by building savings. Time is what you need. Build your own strategy for savings so you can USE time.
Time is the thing you cannot control. That’s why the next word is so important.
Life is filled with good news and bad news for everyone regularly. We will spare you the lesson on how bad news highlights the good and makes you grateful for the highs, but we will absolutely point out that one of the best philosophies you can have in personal finance is to expect highs and lows.
People like to think they can’t save a lot of money because of bills or unexpected problems. The truth is that you don’t have to save it all at once. Time is the only thing you truly cannot control. Use it to your advantage. Start saving. Do it regularly.
Everyone faces bumps. Being persistent with regular and automatic savings will help you grow a proper emergency savings fund for 2009 (15 to 18 months of expenses in a money market savings account or certificates of deposit – both in FDIC-insured institutions).
Don’t let anyone tell you that you cannot grow savings. Commit. Get started today. Spend more time reading our past blogs and you may find some additional “love” for saving and easier ways to get it done for yourself.
SAVE MORE THAN MONEY
In this country we don’t do enough to teach our children about money, managing money, saving regularly (and automatically), compound interest and steady investing for a long-term future. As a parent, we are always concerned that they get a good education and go to a good college so they can make a lot of money or have a valued career path. The truth is that we could do our children the biggest favor and one of the best things by sharing with them sound saving and investing principles.
You can join our free Facebook group (or have your children do it, too) by searching in the Facebook bar on your “wall” for “Live The Lifestyle Your Family Deserves.” Click on “become a fan.” It’s free and it ties our free blogs into that group.
If you want to give your children the same information we are giving ours, you can purchase the only thing we sell on any of our blogs or groups. It’s called “How To Survive Any Financial Crisis” and you can get it for only $4.95 at http://www.middleclassmoney.com.
Thank you for reading our blog and good luck!