Claudia Lynch, Contributor
EACH YEAR, we undertake to make "this year the best," whether it be from a personal or a financial standpoint. However, we don't always fulfil those objectives for a number of reasons.
Discipline and self-encouragement play a key role in achieving any goals we may set for ourselves. This is no different when it comes to money matters, and in fact, maybe more discipline is required for saving as we have a tendency to place this at the bottom of the "list".
Therefore, the challenge going forward is to approach saving and the need to save with a different frame of mind. Saving should always be at the forefront of our minds, as without it we cannot realise financial prosperity.
There are a number of factors that must be considered in order to achieve and maintain this healthy habit:
Living within your means - You should exercise frugality in adjusting your living expenses, so that you create and maintain a regular saving plan. It is recommended that you set aside at least 10 per cent of your total income to create wealth. Remember patience is important, once that is embraced, you will reap the rewards later.
Credit cards - Pay off the accumulated balance on your credit cards every month. At about 45 per cent interest, the banks rates are high and you will never get ahead this way. If you are carrying a hefty balance on any credit card accounts, pay these promptly. Money paid as interest monthly could be saved!
Automatic payments - Using this technique is a great way to have money transferred to a savings or investment accounts on a monthly basis. You won't have to remember to contribute to your savings plan every month.
Create a budget - To help you discover exactly where all the money is being spent, actually writing on paper what you earn against what you spend is the easiest way of sorting out what you can and can't afford. It is the only way of coming up with a reasonable estimate for your weekly/monthly spending. Add up all your income, such as salary, and any additional money that you may receive monthly, and subtract from it your expenditure, such as rent, mortgage or other necessities. The amount remaining should be allocated to spending or saving each month.
Keep track of spending - Make a note of every time you spend money and what you spend it on. Review this list weekly; and ask yourself such questions as "did you really need to buy that pair of shoes or cellular phone?"
Educate yourself - It is easier than you think to obtain information on the various types of financial options and products available. Once you have garnered all the necessary information, you can begin to make a decision as to which savings/investment option is right for you, and what steps you need to take in order to realise your financial commitment.
If you have not started saving for 2006, don't be dismayed, there is still time to follow the advice above. Remember, it is okay to spend, but you will be surprised how much you can accumulate if you start saving purposefully.
Claudia Lynch is a client services supervisor at DB&G's Merchant Bank. To further discuss investing and the many options we have available, contact her at info@mydbg.com or toll free at 1-888-CALL DBG.
