I can say without a doubt that my biggest secret for saving money is to make a budget. This is step number one in any venture to save money. It has often been said that you don’t plan to fail, but you fail to plan. A budget is a financial plan and will help you set your financial goals.
When I started to work as a paperboy at the age of 13, I already knew in my house that it would be important to save for college. Budgeting did not seem as important then as it would become later on, but I did have to ask myself some tough questions about what I needed and what I wanted to buy with my newfound money. I was fortunate that I was provided with food, clothing and shelter by my parents. So I had quite a bit of discretionary income to play with, but I chose to save 95% of all I made, because I knew that college would be very expensive. By the time I quite my paper route 2 years later I had already saved up for 1 semester of college courses and room and board.
My goal was to save more money and pay for at least 4 more semesters. I was able to get a part time job in High School and save for yet another semester of college by the end of High School. Throughout College I worked in the student dining hall and did all sorts of tasks of serving food, washing dishes, cleaning tables and supervising shifts. After my first year in college I went to work for an amusement park during the summer breaks and pulled all day shifts to earn overtime pay and by the end of college had saved for 3 more semesters, for a total of 5 semesters. It took a lot of sacrifice, dedication and goal setting to achieve paying for 2/3’s of my college education, but I was really happy to have done it and it taught me some great life lessons.
My next goals after getting out of college were to save for a car and save for an apartment. This is where setting a budget became very important. Though I was living at my parents’ house, I needed to set a budget to pay for rent and other personal expenses that would come up. It was a recession environment that I was graced to come into from college, but that made it all the more important to set up a plan to save for a car and save for a deposit on an apartment.
I did my saving for a few months and when it got to be difficult to share my parent’s car, I decided I had saved enough for a down payment and did my homework buying an Auto price guide and getting the best deal on a financed Chevy Cavalier. For the next 2 years, I stuck to my budget that had grown a bit and tried to save every cent I could. I was fortunate that I was able to move in with my brother and a friend as roommates and cut my housing expenses. Things were still tight, but the budget just kept chugging along.
The next goal was to save for retirement. I remember hearing quite a bit about saving early for retirement and I knew that it was the right time to save early and let time be on my side. At first I took baby steps and saved 1% or 2% of my income. As my income went up and I learned about the company matching policies of the 1990’s, I tried to maximize my contributions to get that free matching money. After all it was billed as free money and I even tried to save extra money beyond the match and was able to save 10% of my income. The match on a 401K was on the first 6% of your income in the mid to late 1990’s. And many companies were matching 100% in the high flying 90’s!
As with any story sometimes adversity will strike and that is just what happened to me. I lost my job at the bank I worked for and had to go and get a lower paying job. Things got really tight, but I unfortunately abandoned my budget. This was not a good idea, but at the time it seemed like I would get a better job eventually. I eventually had to raid my 401K and took about 80% of my 401K money to pay bills.
I knew there had to be a better way and the budget had to be reinstated. Though, I was still making less money, I tightened my belt and made the necessary steps to live within my means. For the longest time I had to abandon the idea of saving for a 401K. Only recently have I been able to start that all important goal again. The next goal is to save for a house.
As you can see life is full of choices and the biggest one is choosing to set a budget to achieve the goals one will set for themselves. Even if you fall down and forget your budget and goals, you can always get back up and start all over and plan for a brighter tomorrow.