How’s your health? Not your physical fitness, but your financial well-being. For most of us, how much we earn tells us how we’re “feeling” financially. But your income is only one part of the equation. How much of your income do you actually keep? Not very much, I’ll bet. Your income is low, you say; you’ve got bills to pay. Gas prices are sky-high, grocery costs are through the roof—who can possibly save?
My answer: You can. Here are simple things you can do today to get going:
SELL OUT. Go through every cupboard, closet and drawer. If you aren’t using it regularly, get rid of it on eBay or have the mother of all yard sales. A typical sale could raise $500 or more when you start to unload your white elephants. There! You’ve cleaned out the house and you’ve got a pile of cash to show for it.
GIVE IT UP. I’ve said it a hundred times already and here it is again: You’ve got to say goodbye to that little vice (fancy coffee drinks, cigarettes, candy bars, bottled water). It can really add up—saving $5 a day gives you $1,825 a year.
BANK THE RAISE. The next time you get a raise (or a bonus), save at least half. Let’s say that raise improves your monthly take-home by $200. If you save half at even 1 percent interest and do that for the next 10 years, that money you didn’t miss (because you never saw it) will grow into $12,725.
SAVE THE PAYMENT. When you pay off something big like a car loan, take the amount you were paying every month and add it to your savings instead. A $330 monthly payment to yourself over five years at 6 percent turns into $23,470—enough to buy your next car for cash.
DO SOMETHING MAJOR. Once you catch the savings bug, do something grand. Get rid of one car if you can. Or move to a cheaper area. A big change could send your savings to the moon. Here’s the thing about saving: At first it’s going to feel like a hardship (like dieting, all you can think about is what you can’t have). During my worst years, when I was spending with reckless abandon and racking up debt, I would have told you with all sincerity that we didn’t have enough money to save. But once I jumped into saving (just a few dollars at first), something amazing happened: I began to feel a new sense of self-worth, dignity and calm. The more I saved, the better it felt. This will happen to you, too. And as you watch your balance grow, prepare for a surprise—saving will become addictive. Try it. See if it doesn’t become habit-forming.