Saving $2000 in 8 months you say, this is an impossible feat. You’re already barely spending money (or so it seems) and you can barely make ends meet. If you’re in this situation, understand that it’s perfectly normal, and that 95% of Americans or more are in the same situation. However, also understand that this situation is not ideal, at all. (Just because everyone else is doing it, doesn’t mean that you should too). It makes a lot of sense to have a cash buffer of savings, primarily as an emergency fund for medical or living purposes. So, how do we get started.
Increase Income, Decrease Expenses
What most people first think about when trying to grow a savings base, is cutting their expenses to the bare bones, which is helpful, but only a part of the equation. Think about it: if you never grow your income past a certain point, there will be a limit on how much you can save, but in reality there is no limit in terms of income. So you should focus on increasing your income in order to save more, and there are many ways to do this. For starters, you can pick up a second job, either in person or online. This is the beauty of technology. Now, the first should be to focus on your expenses, as it will give you a base of savings. The first thing you want to take into consideration is your rent. This will be your major expense so you want to pay closest attention to it. The idea is to find a place to rent that is less than 15% of your after tax income. If this seems tough to do, then you should consider moving farther from where you work. Once you feel comfortable that your expenses are reasonable, it is time to look at increasing your income. Remember, both are equally important in building wealth.
Spend More Time To Save More Money
This is an aside off of the above text; but it’s a very important note. Wealthy people will talk about how they value their time so much, because they no longer value money highly. (They are financially free). However, if you have no savings, then you value money a lot, so you should be willing to save money at the expense of your time. This means you should be willing to walk somewhere instead of taking a cab, and live farther from work (this is huge) in order to save on rent. These factors make sense when you’re saving, until you’re rich!! Then you can take that 30 minute flight instead of that 4 hour car ride!
Think Delayed Gratification
The entire idea of saving relies on delayed gratification. If you are saving, it means you plan to eventually use that money for something in the future, whereas if you spend everything you make, you are inherently living in the moment. This is a key point to remember; if you spend all of your income, you will be stuck spending all of your income, until you die. This sounds harsh, but it is true. You need to start saving, and investing, yesterday!!
Money Should Be a Priority
Last important point here is that there is no reason to believe it when people say that money is not important. Money is the source of food, shelter, and health, and really should be your focus for a large part of your life. This may sound shallow or not moral, but you need money for healthcare, groceries and a mortgage or rent payment, and you need it to enjoy most things in life on top of that. One point people will make is that family is more important, which is true; family (or spouses/anyone you care about) are very important, but a functioning family cannot exist without some source of income. There you have it folks; start saving and you’ll get to $2,000 or even $2 million soon enough! Let us know how you are progressing as you step towards financial freedom!
