“I found the road to wealth when I decided that a part of all I earned was mine to keep. And so will you” retorted wise and wealthy Algamish in George Clason’s timeless classic, The Richest Man in Babylon. The simple habit of saving money will serve you well on the road to building wealth.
As Algamish pointed out, it starts with a decision. You might think you can’t afford to save. Truth is you can’t afford not to save. Cultivating the habit of saving will save you from living in permanent crisis mode. Without proper planning everything is an emergency. When life throws a financial curve ball, astute savers hit the ball out of the park with their savings.
Individual savings rate could be expressed as a percentage of income. What is your current savings rate? Do you have a savings target? Financial planners typically recommend having 3-6 months of living expenses set aside in an emergency fund. This may sound like an aggressive target depending on your current financial situation. Don’t despair. Start where you are and gradually work your way towards the goal. Automatic payroll deductions and saving future salary increases are examples of proven strategies for increasing one’s savings rate.
Saving is seemingly boring. It puts present consumption on hold for the sake of a future payoff. It means putting what’s important ahead of what’s urgent. However, important but not urgent things, repeatedly neglected, often come back to bite us with sudden urgency. “The essence of self-discipline”, says Barry Werner, “is to do the important thing rather than the urgent thing.” Do the boring stuff. Save now and you will have fun later, unfazed by the urgency.