One question I get asked alot is : “How much should I save?”  The simple answer is the one everyone gives; 10% of what you make.  This figure is used because it is simple math for anyone to figure out.  If you get $200.00 you save $20.00.

I absolutely agree that if you can get to the point where you can save 10% or more, you are well on your way to Financial Independence.  (Depending on what you do with your savings.)  This is the mantra of many of the courses I have been on, because, Saving or paying yourself first, truly is the first “Secret of Wealth Accumulation”.

If you are just starting to earn money and have no debts, then Saving 10% of what you make is exactly what you need to be doing.  The secret here is to ALWAYS KEEP DOING IT!  The reality is that if you are young, working, living at home and earning some money, with no real living expenses, saving 10% is easy.  If you do it all the time, it becomes a habit, and will follow you through life.

But, what if you are past that stage, and you’re not in the habit of saving 10%??  Living in the real world has expenses that go with it.  Like rent/mortgage, utility bills, car payments, entertainment, food, etc.  If you’re in this situation, where your running out of money before you run out of month, how do you suddenly save 10%?  The money has to come from somewhere!  What are you going to cut out?  You might have to make major changes to your lifestyle.

There are many reasons why people have trouble with suddenly saving 10%.  I feel there are 2 main ones.  Number 1 is; most people have no idea where, or how, to change their spending so that it has minimal impact on their lifestyle.  Number 2 is; changing your lifestyle is not something most people want to do.  (unless it is for the immediate better)  There is a way to minimize these 2 issues, and that is by Tracking your money before you do anything different.  Tracking your money will show where you might be able to generate some savings.

But what if you don’t want to do any tracking or Cash Flow Planning, you just want to save some money every month.  How do you do it?  That is also simple.  Start by setting a reasonable goal.  Like $5.00 a week.  (If you take home $400.00 a week, $5.00 is 1.25%)  Do this for 4 weeks.  If you don’t have to make any unacceptable changes in lifestyle, bump up the amount to $10.00.  Save this again for 4 weeks.  If there are no unacceptable changes again,  bump it up to $15.00.  Continue doing this until there is an unacceptable change to your lifestyle.  Then back off ONE step.  Wait for eight weeks then bump it up again.

If you have an increase in income, immediately increase the weekly saving, by at least one step, but try for 2 steps.  If you get a wind fall of cash, (small lottery win, birthday money, etc) I would suggest that you put 50% minimum, away immediately.  Spend the rest.  You need to spend some of it because; if saving is a chore you won’t do it.

If you do this as a minimum, start at $5.00 a week, and even if $15.00 a week is all you can manage, you would have a savings account balance of $780.00 at the end of the year.  No matter how small the savings per week or month, after 12 months you will have a savings balance.  Saving is important!  There is no Wealth Accumulation without it.  So if you really want Financial Independence then you have to Save even if it hurts.  There are two saying that apply here.  “No pain, No gain” (not sure who to attribute it to) and “Pain is just weakness leaving the body”.  (From the US Marine corp.)