Most people don’t save a dime of their incomes. And when they save, they’re either inconsistent or they don’t save enough. Usually, saving up to 10% of your income consistently is enough, to invest or fall back on during an emergency.
The first reason why most people don’t save consistently is because their salaries can’t cover their basic expenses. Since no amount of financial prudence can override the need for a paycheck that covers basic and secondary needs, and leave behind some money for the rainy days. The second reason people don’t save is the lack of discipline.
The habit of saving cannot be cultivated independent of the consciousness to try to improve income. The reverse is also true, if you improve your income only to splurge it, without saving a significant portion of it, you’ll end up still broke.
The problems of not earning a sufficient income and that of lack of discipline require different solutions. It takes more time and actions to surmount the problem of insufficient income than it takes to solve that of lack of discipline. The subject of increasing your income is an expansive one on its own. It requires several volumes of books to cover.
On a basic level, to increase your income you’ll need to increase your knowledge of personal finance, and from time to time, hone your professional knowledge and skills. Above all these, you must take actions to implement what you learn. That way, your knowledge becomes deep-seated and your experience improves. In addition to that, you’ll need to meet and connect with the right people and stick with the process long enough to seize recurrent opportunities and become eligible to reap the benefits of luck. The road to financial success is long and winding. It is only those who study the rules of financial success and stick to those rules that wind up achieving it.
How The Habit of Saving Contributes to Success
A Lifeline, A Backup, And A Means of Keeping Your Sanity Intact at Most Times
Having in savings an equivalent of six months of your living expenses will provide you with a lifeline, in the unfortunate event that you ever lose your job until you get a new one. Also, you don’t have to endure an unfulfilling career or a career rut, for fear of deprivation. You’ll have the grace period of six months to search for a new and better job while maintaining your exact lifestyle. It however takes a lot of work and time to reach the stage where you can afford a six months equivalent of your living expenses in savings. For most people, and throughout their lives, it remains a pipe dream.
Means to Exploiting Recurrent Business and Life Opportunities
Success in both life and business elude people who don’t save because without savings, they lose out on many opportunities. Saving and opportunities overlap. Opportunities tend to spring up without a harbinger and at the most unexpected times. And since money is required to exploit opportunities, you’ll need to always have a reserve of funds to resort to when opportunities present. Opportunities will pass by the person who doesn’t save to the one who saves, who will seize them and who has some ready funds in the form of savings to do so. His savings will embolden him to move with speed, something that opportunities are attracted to the way ants are to sugar. And your lack of savings will clog your progress, pin you to the ground and make you ineligible to seize opportunities.
Savings as Source of Startup Capital
Funding is crucial to the success of every business. It takes time to attract funding from angel investors, venture capitalists, and most of all banks. While pursuing investors and trying to get them to listen to you and eventually fund your startup, there’s the need to develop a prototype or what business people call a minimum viable product. You’ll need to gain traction to show prospective investors that your business is viable and can pay them back their investments. The quickest way for you to do this is by drawing on your savings to develop prototypes and gain momentum, while keeping your startup expenses at the barest minimum. If you don’t believe in your business enough to fund it at its embryonic stage who else will?
I’ll love to know what your situation is with savings. Do you save? If you don’t, why? Let me know your thoughts by dropping a comment below.