JIM “PAPPY” MOORE: A Savings State of Mind

Saving money is a habit. It requires discipline. You have to have rules for yourself on how and when you will spend money.

It starts with deciding how you are going to keep your spending below the level of your net income. For those who are retired this is especially important. For those who are young it is also important.

Many have a tendency to find something to buy for every net dollar they bank in a month. There is no savings on a regular basis, which means there is no savings. Period.

First you must know where your money is going. You do this by keeping a daily ledger of every dollar you spend, every day. You label it. Food. Groceries. Gasoline. Electricity. Water. Car note. Rent or Home payment. Write it all down. Keep a cumulative total to the right. A running total so that every day of the month you know exactly how much you have spent that month through that day.

It’s a good idea to know what your ceiling is for spending in a month, and how much that comes to if averaged by 30 days in a month. Suppose you clear $2000 a month. That means you must average less than $60 a day for 30 days. That will total $1800. This will result in $200 a month savings. This is a good goal – saving 10% of your net income per month.

When you treat saving like a priority, it will happen. When you treat saving like an after thought, you’ll spend every dollar, every month. It matters. Saving $2400 a year is more than just saving it. The process builds discipline in how you handle your money. It’s also a cushion for when you really, really need it.

Learning to prioritize saving will help you decline expending money for things you really can’t afford. It helps you learn to bargain shop by comparing items at various stores. With many stores having online listings of prices, there is no reason to pay $8 for a half gallon of ice cream from one store when another sells the same half gallon for $6.50. Compare prices before you ever go shopping.

Make sure you’re getting the price best on gasoline. Don’t buy expensive gasoline because that’s the one you have a Card for. Almost all places give a discount for paying with cash.

Don’t overuse credit cards. It gets you in debt in a hurry, and the interest rates on unpaid balances are outrageous.

Set simple rules for yourself and abide by them. Tell friends you have such rules when you decline to go to dinner and spend $40 when you could eat at home for $8.

There is freedom in savings and having a plan for savings. As you get used to it, you find that setting limits for yourself works, and the result is you never have bills that exceed your income stream. And if you do, you have some savings to fall back on.