30 days to reaching your potential day four: Open a savings account

Having savings is important to living a better and less stressful life, while having a surplus to help you reach your potential when the time is right.

Over the years, I have looked at a number of family and friends that I know who have gone out and got into huge amounts of debt buying new cars, houses, game consoles and lots of little pieces of random junk. A few years later they are regretting their purchases or want to upgrade to a new model, but the debt still remains. They tend not to have any savings and in the event they are injured or lose their job, they will find things quite difficult.

Savings is merely a security buffer. If you have savings, it provides you with the security of knowing that their is money available to you at any time you need. This can be a huge confidence boost for a lot of people who have gone without money for some time.

Today's task is to open a savings account. If you already have a separate savings account, then commit to contributing to it on a regular basis.

Starting a savings account does not have to be hard. Admittedly a lot of wealth creation books recommend saving 10%+ of your income, but you can begin by saving a few dollars a week. If you save $20 a week for a year, you will have $1,040 sitting in the account at the end of the year (plus a little bit of interest).

The way to build savings is to spend less than you earn. The difference between your earnings and your spending is what I like to call a 'buffer'. All you have to do is simply put the 'buffer' into your savings account. If you want to save more, you need to increase the 'buffer' between earnings and spending and continue to put the difference in your account.

As your savings account begins to grow, you will find that provided you don't spend it your life will begin to feel less stressful. Having some money aside in the event of an emergency or to cover unexpected expenses such as car breakdowns, etc. will make you feel fantastic.

One way to ensure your savings continue to increase is to setup an automatic transfer with your bank account a day or two after your pay goes through. This will ensure that the money goes in and you don't spend it on 'stuff'.

Actions:
  1. If you don't already have one, open a savings account.
  2. Put a small amount of money into this account.
  3. Determine how much you can 'reasonably' commit and stick to your goal.
  4. Spend less than you earn, save the rest and consider investing it when the time is right.