How to get into the habit of saving

Have you heard the advice that you should be saving 10% of your take-home pay? 

If so, you didn’t hear it right. Because the saying goes that it’s at least 10% that you should be saving. And, depending on what you’re saving for, it could be a lot more than 10%.

Stephanie O’Connell addressed this recently in a very informative and helpful post on her blog:

Though a 10 percent savings rate may be a popular savings norm, it’s probably not a savings rate that will afford you your dreams, it’s not a savings rate that will allow you to stop working or retire early or achieve the financial goals that matter most to you.

And how does that sum compare to the cost of the lifestyle you want to live and the money milestone dreams you want to achieve?

Now how much more could you afford with a 20 percent savings rate or a 50 percent savings rate?

As you project these new sums, you’ll start to see how much more of your 5, 10 and 20-year goals upping your savings rate can afford you. Which can help make saving money a true priority.

Now that we’ve completely burst your bubble, here’s the good news: Saving a substantial part of your income is not just a good idea, it’s very doable with commitment and the occasional difficult choice. Here’s Stephanie again:

If you don’t make much money, or your supporting a family on one salary, or your combating a costly medical condition, obviously this will be far more challenging. Identifying resources for support and opportunities to increase your income will also be essential in enabling you to scale your savings contributions.

But remember, this is just an exercise, allow yourself to really go there and imagine what it might look like to live on just 60 or 50 or 40 or 30 percent of your income each month, so that you can save the rest.

Close your eyes and visualize this radically different future.

There’s a lot more to get you inspired at Stephie’s post.