Saving money basics is an essence of using money wisely. Keeping these basics in mind goes a long way in general economics.
When committing to saving money you should put aside 10% of your income while paying your essential bills. Next you can then consider what you will do with any remaining money. Save the 10% by how much you earn each day, week, or month. Save your money no matter how little or how much you make even if it is just a dollar that you have made. Use an interest yielding savings account. Place your money for savings into the highest and yet most secure, virtually risk free, account. You would do well to save enough money for you to pay your rent or mortgage for at least 6-12 months. Maintain at least this much in your savings at all times. Avoid taking money out of your savings account while contributing to it regularly until retirement. Invest in at least two savings accounts each with a different institution or bank. Each savings account should be for a unique purpose. Saving money during the course of a year will pay for your estimated income tax for that particular year. So have one savings account just for paying your taxes. This could even be a strategically funded CD account that matures before you intend to pay your taxes and, if possible will have enough left over to reinvest. If you have over estimated then transfer the remaining money to your savings.
When saving for an expensive item (a major appliance, home improvement project, home, vacation, or an automobile) have a separate savings set apart from your main savings account and it should not take away any money from your main savings. Write down your goal of saving for certain items and how long it will take to save up for them. Save money at a rate that does not put a financial strain on you or your family. This secondary and short term savings should be taken from your income after contributing to your major long term savings account. Make sure that this account does not make you liable for penalties for withdrawals or is to be redeemed after a certain period of time. If you need to save more money after your temporary savings matures, just reinvest it into another short term account. Saving money on a consistent basis and not in a sporadic manner should be practiced. Make sure that your savings is insured by the institution where you have the account. Insured banks usually insure money up to $100,000.00 and paypal.com insures money up to $200,000.00. Keeping these money saving basics in mind will help you retain more of your money throughout your lifetime.
Published in: Personal Finance