Why is saving money important? Saving money allows you to plan major expenditures, avoid debt, reduce financial stress, handle emergency expenditures, and have a greater sense of financial freedom.
Dave Ramsey is an author and radio host known for his financial advice. Dave says the first thing to do when you want to get your financial life in order is, save $1,000. The reason is you need to have that cash on hand to handle the things that always seem to come up - a flat tire, or the washing machine that just died.
How can you save $1,000? Set a budget for everything you do. Make a list for the grocery store and stick to it. Buy store brands. Don’t eat out. Sell things in your house you don’t use. Pick up a part-time job to make extra money. Cancel subscriptions you don’t use. The act of saving $1,000 does more than set up an emergency fund. It provides you with a sense of achievement and self-control.
Dave Ramsey’s other key piece of advice is to get out of debt. He advises starting with the smallest debt and work your way up to your largest debt. Removing debt from your life allows you to move toward establishing savings.
Always use cash to pay for everything from groceries, to your car. The rationale is that we’re far more aware of what we’re spending when we use cash versus plastic. Plan your weekly budget and prepare envelopes of cash specific to budgeted items. If your weekly budget for groceries is $75, you put $75 cash in an envelope and that’s what you’re allowed to spend.
If your paycheck is directed deposited, set up your bank account so that a portion of your paycheck is automatically transferred to your savings account. It’s easier to save when you never get to touch the money.
For a complete list of money-saving tips, visit Dave Ramsey online.