3 Money Saving Rules to Follow

When it comes to money it seems that very few people have the ability to do one thing: take good advice. Let’s face it, most people see saving as being “boring” and spending as being “fun”, which is one of the reasons that millions of Americans are up to their eyeballs in debt.

Below are 3 extremely basic but excellent rules about money that experts have been giving out for years but, unfortunately, nobody seems to be following. If you want to keep your finances looking good, keep your debt extremely low and retire with a lot of extra money, you would do well to follow the next 3 bits of advice. Enjoy.

Rule #1) Treat your finances like you would treat your own business

If the typical consumer treated their finances the way they treated either their business or their work, they would realize that there’s only one thing that matters; the bottom line. Indeed, the same principles that are used by business owners everywhere can also be used to run your personal finances, including prioritizing, assessing and restraint.

If you prioritize your spending, regularly assess both the amount of money coming in (your profits) and the money going out (your losses), and you show some restraint when it comes to purchasing things that you don’t need, your financial affairs will stay quite healthy.

Rule #2) Make savings habitual

As we mentioned above, it’s difficult for many consumers to save money. Not only that but, many people start and then give up in discouragement. The fact is however that, like maintaining an exercise routine and watching your weight, saving money takes a lot of diligence, patients and persistence. If you can make it something habitual you’ll find that it turns into one of the best habits you’ve ever had.

Let’s look at it this way; if you saved just $20 a week on your grocery bill, that’s almost $1600 a year! Now think about all the other places where you could make small cutbacks in your lifestyle, and do it regularly. Once you start and get into the habit, chances are you won’t even notice the difference except for one place; your bank account.

Rule #3) Every time you save money, save the difference as well 

Many consumers make the mistake of thinking that they have “saved” money on something when, in fact, they simply used that money to purchase something else. Let’s say, for example, that you saved $50 a month on your cell phone bill but, instead of taking at $50 and putting it into a savings account, investing it or putting it in your IRA, you simply spend it on something else. Is that money really “saved”? No, not at all !

Every time you save money you should take that money and put it into any type of account where you won’t spend it. While we don’t necessarily recommend a savings account (because the interest is just ridiculously low), even that is better than spending the money. You would be better off putting it into your 401(k), an IRA or investing in bonds however.

Those 3 Rules above, while extremely basic, are extremely potent as well. If you put them to work for you, and make a habit out of all three, you’ll find that your finances start to get much healthier and make your Roth and Educational IRAs,  401(k)s, bank accounts and retirement accounts much fatter.

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