One of the most important aspects of money management is saving money. It is also one of the hardest parts to master.
Saving is basically a habit that you have to form. Much like making a habit out of only paying for things with cash, it is slightly tough. But you have to keep your eye on the goal. By watching your money accumulate and build interest, you will soon find that it is easier given time.
You should start by planning a budget. Gather all of your bills in one place and find out what you spend each month. Take the time to track your spending so that you know how much you are spending and on what.
Once you have a budget, you can see where you can eliminate unnecessary spending. This is the money that will go into your savings account. Sit down and write down what your goals are. They may include early retirement, going on vacation, buying a newer car and so on. These are the things that you are saving for. If you keep them in mind, passing up on something small in order to put more money towards your new car doesn't seem like such a sacrifice.
Once you know how much money you can set aside each month, you need to make it as easy as possible. If your employer will direct deposit for you from your paycheck, have a certain amount of money directly deposited into your savings first, with the rest going into your checking. This is the easiest way to save money. You won't even notice it is gone, because you never really see it. Out of sight and out of mind.
Next, you need to protect your savings and your budget. To do this, you will need to have some savings set aside specifically for emergencies and unexpected expenses. You never know when a vehicle will break down and require costly repairs. Or what if you lose your job. You should try and have at least three months of living expenses in a savings account. This will be a buffer between unexpected expenses and your budget. And it will prevent you from dipping into your long-term savings.
However, if you are in debt with a large amount of credit card debt, you need to be paying off that debt instead of saving. Go ahead and start building an emergency fund, but keep your debt payoff as your top priority. It simply makes more financial sense in the long run. Once you have paid off your credit cards and other debts, you can take that money and put it into savings. Believe me, your money will grow faster this way than by saving first and paying off debt later.
Martin Lukac represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com , a finance web-company specializing in real estate and mortgage rates. We specialize in daily updates, mortgage news, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!