Chapter 1: What Makes Saving Seem Impossible
It’s normal to spend money on a daily basis, but what’s not normal is not noticing that some of these expenses are actually more impulsive than necessary. In this book, you will learn about the simplest ways to save money, what are the usual culprits for not being able to save, and further tips on cutting costs efficiently.
Why Do We End Up Wasting Money?
Nobody really likes to waste money. If given a clean chance to, you would re- ally like to save or set aside money for more important things. What people have trouble with is finding that “clean chance” to start saving. Oftentimes there are small windows opening, giving way to a chance to save up. However, 90% of the time people fail to take it. Why do people fail to take the small and frequent chances to save up?
1.Believing There’s Always Another Time for Saving
It’s common for people to put off saving because they are either already in the middle of a financial crisis or simply caught up in a shopping spree. It could also be said that people don’t feel financially secure, so they think that starting to save might just make things difficult. What happens is the development of this mindset – “I can start later.” Sometimes, this “later” never comes, or when it does, there are emergencies and other more pressing financial matters need attention. In the end, there’s really no better time to start saving than now.
1.Letting Money Run its Own Course
Without organized finances and set goals, people end up buying things they want randomly and impulsively. Oftentimes, because people put off saving, they are unable to produce money to buy whatever they set out to purchase. It takes months, if not weeks, for them to produce the right amount to afford what they need. Sometimes, their goals are pushed so far from their expected deadline or, in some occasions, even entirely forgotten.
1.Thinking Independence/ Not Being Tied Down Doesn’t Require Saving
People with families are not the only ones who should think about saving money. At some point in your life, you will grow old, become obsolete in your career or simply experience financial difficulties. During these trying times, you will wish you had some “backup” stored up somewhere to help you survive. Aside from that, just because you are flying solo, it doesn’t mean that the things you buy impulsively doesn’t add up to much.
It might surprise you but most single (not in a relationship) individuals spend twice as much, if not equivalent, as a person who has children or a family. Weekly take-out dinners, designer clothes, exclusive DVD sets, and entertainment systems are infinitely more expensive than a month’s worth of diapers.
Chapter 2: Investing in YOURSELF
So what should you spend money on? One of the first things that you should invest in is yourself because being able to save money starts with you. The better health you are in, physically and mentally, the better you can perform at anything! Besides health, you should also make it a priority to live in a good environment, have strong relationships, and have the willpower to get into some great habits, and that includes spending habits! You will learn more on how to sharpen your spending habits later on, but for now, I will share with you the importance of investing in self-improvement.
I believe that you can never improve yourself enough. There is always room to learn something new and there is always a way to get better at some- thing you’re really good at. When it comes to spending money, it is important to pay your bills, but the next thing that you should focus on is putting money towards self-improvement. This includes your physical health, mental health, and education.
The healthier you are physically, the less likely you are to develop illnesses and ailments and you’ll also have a higher chance of living a longer, happier life. In a way, money can’t buy that feeling of success, but if you pay attention to what you do put your money towards, your chances of reaching financial freedom can be much greater.
Chapter 3: The Best Ways To Save and Pay Off Debt
Before you learn about the different ways to save and spend your money, it is important to understand the importance of saving. Since many people have trouble making the decision to save or pay off debt, you will also learn the reasons why you need to make this a priority in your life.
Build a Savings Account
The two most common types of checking accounts that most people have are checking and savings accounts. By keeping money in a checking account, you can gain easy access to that money for spending by writing out a check or swiping a debit card. A savings account is a little different. Many people put money into a savings account for the purposes of, obviously, saving. You might open a savings account to save money for emergencies, retirement, or a down payment for a large asset. Money that you put into a savings account acquires interest over a period of time. Best of all, you don’t need a large amount of money to start a savings account. Depending on your bank, you might only need as much as $25 to begin. Some banks charge a low monthly fee or offer them for free to open a savings account and interest rates will vary by bank. Always shop around before deciding on a bank to open a savings ac- count with. You should generally be able get one for free.
There are many benefits to opening a savings account. First and foremost, your chances of spending that money are much less than if your money was in a checking account. Secondly, your money is safe in a savings account. If your house were ever to get burglarized, or if a tornado ripped through your neighborhood and swept your house away, your money would still be safe and sound in the bank. Money in a savings account is also safe because it is insured by the FDIC if you live in the USA. So if your bank were to close, you wouldn’t lose your money. Finally, many people open savings accounts to accrue interest. That is when your bank pays you money to lend your money. When that happens, your bank will usually pay you interest every month.
Investing Your Money
Besides opening a savings account and letting the bank lend out your money, there are many other smart ways to invest your money. This section will give an overview of the different types of investing. Many people are turned away from the idea of investment because it can often be a risky venture. However, as long as you go into it with knowledge and goals, your chances of being successful can be higher.
Invest in Property
Many people who invest in property for business purposes usually make a great profit in the long-run. For example, if you buy a car for $25,000 and use it as a taxi cab, you can pay the investment off in 5 years if you bring in $5,000 a year. Then, after 5 years, you can make a profit for as long as you operate the cab. If you buy a home for $100,000 and rent it out at $2,000 a month, you can make your money back in roughly 4 and half years as well as a $24,000/ year profit after the investment is paid off.
Real estate investments are great ideas because with the right strategy, they can make you thousands of dollars and require little work, depending on how you invest, your tenants and what the condition of the property is.
Invest in Other Businesses
Investing in another business allows you to share part of the profit. For example, if you make a 50% investment in a skateboard shop and the shop makes $10,000 after expenses, you will receive $5,000 of that money. This type of in- vestment can be a little risky.
Capital Gain Incomes
Capital gain incomes is a very simple type of investment. A capital gain in- come is when you go out and buy something at one price and then turn around and sell it for a higher price. The difference between the price you bought it at and the price you sold it at is your capital gain. This is a great strategy when you flip a property, buy and resell products, or start and sell businesses.
Invest in Stocks
Investing in stocks is another great method of investment, although it can be risky, such as investing in a business. The two different types of stocks are called preferred stock and common stock. Preferred stock is best for those who don’t get excited by risk taking because the price of the stock doesn’t tend to fluctuate. Shareholders also get paid dividends through preferred stock. So if a company were to go bankrupt, preferred stock holders would have a priority over common stock holders. Common stock is more risky but its return potential is much higher.
Invest in Bonds
When investors loan money to businesses and the government, they issue a bond when the money they need is too much to get from a bank. By invest- ing in bonds, the organization that sells bonds (the bond issuer) will charge the buyer an interest rate. By lending out your personal money you will be able to collect that interest rate over time. Bondholders have first priority when bankruptcy hits and are much less riskier than investing in stocks.
RealEstate. Many people buy real estate properties for as little as possible, put money into restoring them, and then resell them for a profit. You can also invest in a Real Estate Investment Trust (REIT), which is when you buy a percentage of a company that operates real estate, such as an apartment complex.
Chapter 4: The Simplest Ways to Save Money
Now that you know what to do in order to get a handle on your finances, it is time to learn about little, easy things you can do to save money. Sometimes, saving money is as easy as making a simple switch or thinking about your alternative options. You will learn some great ways on how to simply save money in this chapter!
Fold it, Put it in your Pocket, and Keep it there
One of the best and most commonly quoted advice about saving money is this: “The best way to double your money is by folding it in half and putting it in your pocket.” In reality, literally, folding your money bill in half won’t double its amount. However, the total value of what you have can and will be doubled for each day you follow this habit successfully. If, for example, in each day you set aside five dollars without touching or scheming to spend it on some- thing, by the end of the week you would have added 35 dollars to your savings.
HOW IT HELPS:
Folding your money over or simply keeping it in your pocket won’t just save you some money, it will help control those shopping impulses. One of the most common mistakes people make when they get their money on – on -pay- is splurging. It’s no surprise if you can relate to a scene like this – pay day arrives and you feel as rich as a king. It only takes a week, or less, of seem- ingly endless wealth until you’re broke or nearly broke. By the end of the month, you’re sulking, cutting down expenses and waiting at the edge of your seat for the next payday. The cycle happens and it will continue to happen over and over again until you decide to act upon it.
Saving Every Penny
Most people think of small bills as insignificant because, well, they are small or have less value and would not really be of any use in emergencies. The truth is, they are actually the most significant portion of the idea of “savings”.
HOW IT HELPS:
Small amounts are what a person builds up and turns into millions. Moun- tains are not made of singular gigantic boulders. They are made of sand, stones, rocks and some boulders. In the financial comparison of mountains to savings, it’s the pennies that make up the base and not the hundreds. While saving pennies won’t make you rich, it will change your relationship with money. If you practice putting your coins in a tin every day, you will condition yourself to save. This brings us to the next overlooked technique in saving money, for long- or short-term purposes.
Starting Small and Starting Now
Starting small is the easiest way to save, but starting small is belittled by most because of the expected value it achieves. “Every little bit counts,” that’s one saying that applies to a lot of things, including saving money. Since the idea of saving up is a continuous and consistent habit, even the small contributions add up to the pile. It’s also easy to save by starting small, because it gives peo- ple enough freedom to buy the things they need or want. It won’t feel like such a responsibility, which will lengthen its chances of actually growing to be a successful habit.
HOW IT HELPS:
The benefit is simple, relating to saving each penny. The sooner you start saving, no matter how small the beginnings, the more chances you’d have to accumulate your wealth.