Tuesday, December 13, 2011

How to Increase Savings - Know Where your Money is Going

Have you ever woken up one day and wondered where all your money has gone ?

I think we have all experienced this at some point in our lives. No matter how much income you earn and bring home it just never seems to be enough.

First of all, remember that wealth is never measured by the size of your paycheck. Many high income earners are in debt up to their you know whats. Your income has less to do with building wealth than you may think. What matters most is how much you keep out of all that you bring home. Yes, savings. That's what builds wealth.

A higher income should mean more for savings. However, this is not always the case. Many times a higher income means more spending as a reward for getting the raise etc. Instant gratification as opposed to long term gratification. It's just human nature.

                                                             What To Do

As mentioned before, you should be saving  at least 10% of your take home income. If you're not, the first thing you need to do is find out where your money is going. Actually, even if you are saving 10%, you should still know where the rest of your money is going. You may be able to further accelerate your plans.

To know where your money is going means making a list of every purchase you make for a full month. Yes, every purchase. Every latte, every snack, everything. Be honest and don't cheat. You will only be cheating yourself in the long run.

You will likely be surprised at how much just slips through the cracks so to speak. All the little things can add up so quickly over time. It's amazing really.

Once you know where your money is going, it is much easier to plan. Yes, plan. You will have to plan what you intend to do to meet your targets for savings. What will you have to do to meet your savings goals?

                                                                    It's Too Hard

I never said that becoming wealthy was going to be easy. The easy road usually does not lead to your goals.
It usually leads to misery and debt.

You must decide what you can live without today to reach your goals of tomorrow. Nothing worthwhile ever comes without sacrifice of some sort.

I hate to use the B word, Budget that is. However, for some, it is the best way to control your spending habits  and to track exactly where your money is going each month. It works quite well actually as long as you follow the guidelines that you set up for yourself. Plan your work, then work your plan so to speak.I will speak more of this in a future post.

Whatever your situation, you should now be better prepared to increase your savings goals. If nothing else, at least you will know where the money has gone. Hopefully that is, as long as you didn't cheat yourself.

As always I welcome your comments and suggestions for future topics.

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