I have just come across this brilliant and practical savings system that will not only get you on the track to securing your financial future but it also lets you spend money on yourself!
Does that sound good to you? Well read on!
In this current climate of doom and gloom with the retirement age being lifted and the likelihood of the future governments scrapping the pension, we all know it comes down to us to secure our financial future. One of the best ways is to invest but when you don’t have the capital to start then how can you seriously consider it?
So you set about saving for that capital but you get bogged down in credit card debt, personal loan debt and you feel like you are constantly depressed about money without getting anywhere. Does that sound familiar? It is exactly how so many people feel and I wish I had come across this concept sooner.
The system changes the way you view your money
The first thing it teaches you is to pay yourself out of your pay-check. It is your money you are earning and instead of having it flitter away you put an amount into an account that will become your investment fund and eventually make you more money. Plus it sends you a positive message by allowing you to look after yourself with those little treats you currently feel you can’t afford. It tells you that you are not a slave to money. You are in control and you are affluent enough to indulge because more money will come.
This plan is a sure fire way to grow your investment savings while still doing the things you love and living comfortably. But it does require you to be honest about your current situation. When you look at your weekly income, how much of it is taken up with essential spending? If this figure is more than 60% then you need to be realistic and get serious. You may need to find a cheaper place to live, try for that promotion or maybe get a second job. It sounds a bit daunting but sometimes we need a little push to escape the financial rut, I know I did. You will be on the path to an investment portfolio and financial freedom in no time and you will never look back!!
So here is the system
Take a look at your income after tax. Allow 50-60% for necessary expenses. The left over 40 – 50% gets divided into accounts as follows:
10% goes straight into your Long Term Investment Savings Account. Every week, (or month) pay yourself this amount. This is where you take control of your financial future and say a big fat NO to working till old age and then living on a pittance pension (that’s if there is even a pension still around!)This account is only to be touched to invest.
5 – 10% goes into Short Term Savings Account – for a holiday, a big ticket item in the home or to replace your car etc. If you were to choose to finance these essentials any other way you would be looking at large interest rates (12-20%) for store credit, personal loans or credit cards so it’s a financial no brainer to avoid these rates.
5 -10% goes to your Attack Debt Account! Use this amount of your income to pay off your credit card/s. working through them all until there is nothing left. This money then goes towards your investment savings account.
5-10% education account. To stay motivated and gain confidence I make sure I take a course every year and it keeps me from losing focus and generally taking my foot off the pedal. I believe everyone should invest in education for themselves or their kids.
5 -10% charitable giving account. I think it is our responsibility in this lucky country to help out those less fortunate than ourselves, choose a course close to your heart and give this amount. If you can’t manage the 5% start with 1-2%. It will also change the way you view your money, you are affluent enough to give and you know there will more money coming in.
5 -10% fun account! With this account you can spend as you like. It tells you, ‘You can save money and still have fun!’ and it rewards you for being disciplined everywhere else. PLUS it sends a clear message that screams:
I am in control of MY money!!
Adjust the ratios to reflect your situation and tweak them every 12 months as your financial situation improves (because it will improve!)
So there you have it, a simple way to take control of your savings and get on the track to investing in the future. Now all you have to do is implement it!
If you would like some help to tailor this system specifically to your situation please feel free to give me a call.
Steve Gillespie
Property Coach and Educator
Your Property Buddy
