How important is saving for a rainy day to your personal finance? “A penny saved, is a penny earned.” The famous phrase uttered by Benjamin Franklin over 300 years ago holds the same value today as it did then. Well maybe not literally since a penny was worth much more back in Franklin’s time, but in principle it holds the same value.
The point of Franklin’s phrase was putting aside some savings today will earn you greater value tomorrow. In theory, it’s great to state you will put your hard earned money aside today so you have a comfortable nest egg for tomorrow.
The challenge for most everyday people is financial advisors and banks have us going from zero to 60 overnight. Most advisors recommend to start saving 10% of your paycheck. It’s a lot easier said than done to start saving 10% of your salary for your nest egg right off the bat. When you do the math, and add up your monthly expenses, that becomes a very daunting and overwhelming task.
Building up to your Comfortable Savings Threshold
Start small when thinking about putting money aside. Review your monthly expenses and determine what you can put aside today for your tomorrow nest egg. If it is only feasible to put a certain dollar amount aside each paycheck, or only 1% or 2% of your paycheck, then start there. After all, that’s 1% of your paycheck that you weren’t saving during your last pay period.
Get yourself comfortable with the idea of saving a percentage of your paycheck each pay period. Continue an ongoing review of your monthly expenses. You will begin to see other areas where you might be able to shave off a few dollars and set it aside for savings. As time moves on, you will see small incremental increases to what you are able to save each paycheck. Before long, you will be at that 10% savings threshold. Set up an automatic withdrawal plan to take money from your paycheck and apply directly to your savings. What you don’t see you won’t miss.
In your early stages of saving, set a goal for yourself that within twelve months you will be setting aside 10% of your salary or savings. Starting small and building up to that 10% threshold, you may find it much more attainable and less stressful to eventually get to your 10% savings.