Saving 10% of Income

The Richest Man in Babylon by George Samuel Clason is a book about financial advice. Through many stories there are lessons about managing your money. The stories take place in ancient Babylon but the wisdom carries through today. So what have I learned from this book that I can apply today to help me save?

I am obviously still a teenager living at home with my parents and I currently do not have a job, so I will have to speculate. There are some easily discernible ways to accomplish this, like setting a budget for my entertainment. Things like eating out, going to the movies and concerts, although they are important for mental health, need limits. Even spending money on Starbucks coffee daily can really add up. Keeping a record of these things for maybe a month or so would help me realize how much I am actually spending. Which is probably more than I could imagine.

Now if I were living on my own I would look at things like groceries. How much money am I spending at the supermarket? Cutting back on food by growing a garden can save money and it is way healthier. I would also cut back on heating and air conditioning, it is okay to be a little too hot or a little too cold. Giving up a little can add up to a lot. Paying attention when shopping for clothes and necessities could easily save 10% of my hypothetical income. I would make the effort to look for sales and discounts. I would not be afraid to be thrifty. I have found cool things in the past at yard sales and second hand stores. I would even be willing to clip coupons.

To me accomplishing all of this comes down to self discipline. It is really the only attribute that any of us need to save 10% of our income. If you think about it 10% is not really that much. It would only take a little cutting back to reach this goal.

The Importance of a Budget

Making a budget, along with the will of staying on that budget, is the only way to reduce impulse shopping. Having a strong will is important because when we are out shopping and see things we like it is our natural impulse to want to buy it. If we know what our spending limit is it will control those impulses. Even small purchases will add up very quickly and can seem like you are not spending much when actually you have spent too much. Spending too much will cause you to be broke until your next influx of money.

Being broke means no money to invest in your future and accomplish what you are striving for in life. If you are always broke you are willing to settle. Living by a budget means saving for the unpredictable things that happen in life as well as necessities like buying a car. Of course this also means you must pay for insurance and gas which is another important reason for not overspending. Having your independence may also open opportunities that may be further from your house that you normally would have declined because you were relying on a ride.

Budgeting means having to sacrifice in the present time and giving up some things. It will teach you to have self-discipline which will benefit you in the future. It will also teach you to look for things you enjoy doing and making choices based on what you can afford. Making a list before you go shopping is important. If you can begin the habit of sticking to that list, you’ll eliminate a lot of impulse buying. For other purchases, make it a habit to plan them, shop around for a better price or maybe even get it for free somewhere. Doing these things will help you make better purchases and cut down on those pesky impulses. When you show up to a store where you plan on buying something, it is a good idea to have the amount of money you want to spend and nothing more.

You could start a splurging savings fund. It might even be fun watching this account grow knowing you can spend it anywhere you want and this amount is not being taken away from your budget. It also really makes you feel good knowing you are in control. Impulse buying will quickly spiral you in the wrong direction and probably not make you very happy. Developing these habits will take time but it will be extremely rewarding in the long run.