Building Financial Security 101

 “I don’t make enough money to save.”

Me neither. In fact, nobody does. Did you know that? And if you made just a little more than what you’re making right now, then THAT would be "enough" to start, right? Why is it though, that there are countless actors, athletes, and big-time musicians who end up broke years later, after making millions? Remember MC Hammer? He filed for bankruptcy in '96 with about $13 million in debt but had earned around $33 million over a 5-7 year period prior. If making $33 million does not constitute as "making enough to save" then how much does? Let me put it another way. How many hours a week do you work 37.5, 40 or 60? Whatever the number is, those hours most likely earn you just enough to pay the bills. If your boss cuts your hours from 40 to 35 per week starting tomorrow, what would you do? Would you hand in your letter of resignation because 35 hours won't earn you enough to cover your bills?  In addition to launching a massive job hunt, you would be forced to adjust and get creative. So, let's get creative starting NOW, shall we?

“I don’t know how to save.”

 We're not born knowing how to eat either, but we figure it out pretty quickly. Why? Because we didn’t have any other option. Saving is also NOT an option, it’s a MUST. Where does your money go right now? Most people will say to bills. Since there are many different bills that we have to attend to, why don’t we just add another one to the pile? This one will be called the “PAY MYSELF” bill, and this is the one we will use as our savings.

Start putting away $20 to $50 per month. Do this on the fifteenth of each month. Why? Because your rent or mortgage is usually due around the first of the month. Whether you get paid weekly or bi-weekly, the fifteenth will be two weeks after your last rent payment and two weeks before your next one. It's the best time for most people. In the course of a year you would have saved $240.-$600 and in fifteen years that would amount to $3,600-$9,000. Always think long term when it comes to saving. You may ask yourself where the $20-$50 is coming from. Well, do you waste a dollar or two a day? Maybe not every single day but on average, over the course of a month, you do. Everyone does. There's the pain of change and the pain of regret. Choose one. There's no third option.

“I’m too young, there’s always next year.” 

Maybe you are…but how young, specifically, is too young? Imagine your great grandparents saved up plenty of money (even maybe before you were born), and told you that at age 18, you could take out the money and do as you wish, and that there would be about $1,000,000 in there by that time. That would be a very nice gift, wouldn't it? Well, they didn't do that. You know why? Because they were "too young" enjoying their twenties, thirties, and forties. And when they were in their fifties and sixties, they were too old and needed to hang on to every penny. More importantly, since no one gave you that million dollar gift at age eighteen, why not give it to yourself at age fifty, fifty-five, or sixty-five? The choice is yours but stop playing the victim and pretending it’s out of your control. Don't flatter yourself either. You're not that young. You're not even as young as you were a few minutes ago, when you started reading this article.

“Why save? What if I don’t live to see tomorrow?”

You're right. You may not but just in case you do don’t you want to be prepared? What if you don't die tomorrow, but you get hit by a car and the driver gets away without being identified? What if you get grazed by a bullet and survive to see another day? Then, you're out of work for a few weeks or months, and can’t earn money. Which of the following will pay your bills; Visa, MasterCard, American Express, mom, dad, girlfriend, or boyfriend? All because you decided that clothes, vacations, partying, and dining out seven nights a week were more of a priority than saving anything.

Let’s stop with the excuses because that’s exactly what they are “tools of the incompetent”. The better question to ask when it comes to creating a secure future is "How do I begin to save and build financial security for myself and my family?"

Do you know that just by calling your creditors and other debt collectors you can reduce spending and add to your savings? I bet you don’t because you’ve never even tried it. Our bargaining power is one of the many gifts we have been blessed with so let’s put it to use. And again exactly how much money do you think you need to be making before you can actually begin to save towards a sound and secure future $50,000.00, $250.000.00, $1,000,000.00? Well what if I told you that even with today’s minimum wage of $7.25 per hour with a 40 hour work week or $15,080.00 annually you too can join the ranks of those earning an annual salary of $100,000.00.  Why is this hard to believe when the average person making over one hundred thousand a year possibly has more debt than the person making just the minimum wage. Not to mention, most of their salary goes directly to Uncle Sam.

It’s true that the more you make the more likely you are to spend. Our lifestyle changes and all of a sudden wants become needs.  We have to change our way of thinking and turn some of those needs into wants so we can begin to pay ourselves first. Remember to treat yourself like a creditor, a mortgage, maintenance or a cell phone bill and PAY YOURSELF FIRST!

Simple Things to Do To Increase Your Net Worth:

At Home
-Empty the coins from your pocket or wallet into a jar at the end of each day and watch it add up.
-Instead of shopping on impulse, create a list as a guide and stick to that list.  Key to grocery shopping: Only buy what you need and replenish during the course of the week.
-STOP EATING OUT and cook: if you calculate the amount of money spent annually on eating out for the average household, it is massive.

At Work
-Study has it that one in three individuals do not use direct deposit despite the fact that it is reliable and safe. It’s an important tool for managing personal finance. Not only is it quicker than a paper check but it goes directly, hence “direct”, into your account and does not touch the hand.

The Buddy System
– Check-in with a friend who has the same goals of saving as you do and motivate each other to stay on the right path.

Budget Yourself
-It is critical to set aside a weekly, biweekly, or monthly budget to follow so you can account for every single penny that comes out of your finances.
-Write down what you’re spending money on in order to eliminate the source.

Multiple Accounts
-It’s so tempting when you have your money in one place, especially when it’s easy to gain access.  For example, many people have their savings account linked to their checking’s so it’s easy to transfer money. You might want to consider another method, perhaps an online savings account which is harder to access. Considering it takes about 3 business days to make a transfer you might have found an alternate method by the time the money is in your account.

Creditors
-Bills are the enemy so stop paying the bare minimum if you can afford to pay more of those credit card bills.
-Make a list of your bills and sort them by who you can negotiate down and who you can not.  For example: hospital, cell phone, cable and credit card bills are amongst the many types you can negotiate an interest rate or a reduction.
-Eliminate the smaller bills first and work on the larger ones. This will give you more money to use towards the larger bills. 

Extras
-Purchase only what you need and put wants aside.
-Treating yourself should be a privilege you get every so often.
-Of all the possible things that people can do to free up money for their savings, the most universally-applicable to all people has to be curbing the money spent on meals. We need to learn to stretch every dollar because, believe it or not, it still goes a long way.

My one regret in life is that I didn’t start saving at an earlier age.  I could have had more of an advantage than I do now. Regardless of lifestyle changes always try your hardest to maintain your budget and live within your means and standards, not how society tells you to live. You often hear people say “I’m living for now, who knows if I’ll be around tomorrow.” and my response “What if you live to be 100 years old, then what?”  Have a plan no matter what, especially if you plan on building a family. So to those individuals still making excuses you don’t need to be making a lump sum of money to begin saving. Yes you might still be young but there is no time like the present. And if the issue is the lack of knowledge then there are many easy ways to learn and you can start by just asking or doing something. If you sit around and wait until you’re making your desired salary then you just might be waiting forever. The time is NOW.