To begin our discussion about how to focus on one behavior to fulfill your goal of saving money, let’s distinguish between habits and goals. For example, you can plan to lose to reach your target weight, which is your goal. But, if you plan to exercise every day and eat healthy food, then it becomes your habit. I feel that if you have to focus on fulfilling your goal, then make it your habit. It will help you to attain your goal. Now, let’s start with how you can focus on one behavior at a time to save more money and achieve your financial goals.
Just like many routines, the key is to stay on the path towards financial independence by following the 6 savings steps. It helps significantly if you choose to walk down this path with someone you are close to. This person can be, and is certainly not restricted to, a significant other, brother, sister, or best friend. There is no age that is too old to start the financial journey along the path towards independence, and there most certainly is not a minimum amount of money required to begin the journey. Remember that you can make each dollar that you’ve earned work for you. This can be achieved by investing. Every dollar invested is put to work; its’ job is to make you more money!
So, you have completed step 4, now what? You’re currently doing everything that you need to in order to free-up funds to create savings, invest the savings in an appropriate long-term savings account, choose and purchase the right investments that suit your risk tolerance and savings plan, but how do you maintain this lifestyle? It’s very easy to fall back into the lavish spending way that you once thought was the norm. Well, practice makes perfect – or at least to as perfect as one can be.
At the end of step 3, I began to discuss how you can put your money to work for you. For the longest time, I kept my savings in a brick and mortar bank savings account which earned next to nothing interest. This was a huge mistake. I should have been investing each dollar strategically in order to earn worthwhile returns required in the compound interest over time process. As soon as I realized how to do this, my financial mindset began to change for the best.
Once you have completed steps 1 and 2, you should now have some funds freed-up for savings. If you were unable to free-up funds while completing steps 1 and 2, then your expenses are fully optimized, and your journey will stop here at step 3. If you’re still with us, then you have some freed-up funds and may be wondering, “so, what do I do now?” That is a great question! Ask yourself these questions:
a) Do I have a 401K? If so, am I contributing the max amount?
b) Do I have IRA accounts? If so, have I maxed the accounts out this year?
For each recurring service I have, I’ll look for competitors who are offering better deals. If I find a better deal, I’ll put a mark next to the service on my list - that I made in step 1. If no other deals are better than what I am paying, I consider that service to be fully optimized. This technique must be done at least twice a year, because service providers like to increase their rates at the same, if not faster, pace. When I am all done researching, I will then make the phone-calls needed to switch service providers. The money saved from switching providers goes directly …
Similar to gardening, there are times when your growing expenses can be trimmed. I like to do this at least twice a year and do so by looking over all recurring financial choices to see if any optimization is needed. How do I do this? First, I make a list of all ongoing payments for services such as internet, video service, gym, auto-loan, etc. Once I have my list, and have collected the monthly payment amounts from my account, I then begin to research competitors. I look for …
Coming this month! I’m going to publish 6 articles detailing the 6 crucial saving steps that I use every day. Following these steps, you will be able to save and put your savings to work! No matter how much money you make, these steps will lead you down the path to financial independence.