Saving takes more than just discipline

Many people find it difficult to put money aside. Although they may be quick to blame themselves for lacking financial discipline, shortage of savings as an outcome may have many more causes than mere carelessness.

For almost everyone, the ability to save is a product of having a disposable income that is large enough to tighten. In order to save, people also should be able to maintain the flow of their incomes and savings for a period that is long enough to help grow them through proper investment vehicles. When they do so, they’re not constantly at risk of seeing financial emergencies wiping out their savings.

With that in mind, it is clear that saving takes more than just discipline. In fact, what you need to do is to take a serious look at your income sources and investment strategies just like you do with your spending. In addition, you also should look at how you’re growing your savings in a way that builds a cushion in case of an emergency.

Here are a few points that can set you on the way to save for the future.

Income

If you’re running paycheck to paycheck, you simply may not be in a position to save in the first place. What you need to do is to grow your income. Obviously taking a second job sounds like the best way to go, but if this isn’t an option for time or employer restrictions, you need to get creative in finding ways that can bring in more money without an ongoing commitment. Options may include doing some contract work on the side, freelancing, etc. On the long term, you will need to look for a new job that pays more, which may requires finding a way to improve your skills and your ability to land such a job.

Expenses

Many expenses are taken for granted because at the first glance you may not see an alternative. If you’re serious about saving, however, you shouldn’t overlook any category. For example, you may think that you don’t have control over gas prices. That is true. But you do have control over your commute time (if you move closer to where you work), and your car size and fuel efficiency. This is just one example of how a complete new look at your expenses can help find area where savings are possible. The only thing you really need is to start with an open mind and willingness to make some compromises in the process.

Savings

Having your money in a savings account may be safer than hiding it under the mattress, but it is not necessarily an investment. With current low interest rates, savings accounts are as far as possible from offering good returns. Based on your appetite for risk and willingness to spend time in researching options and managing your money, you must consider other investment vehicles from stocks to real estate. The point is to make sure that your money isn’t stagnant and losing value in view of inflation. Once you begin to invest your returns you create an upward spiral that can help you feel positive about continuing with your saving and investment stategies.

Emergencies funds

You can put aside a few hundred dirhams every month for a few years and see them gone in an emergency like an illness, car accident, lawsuit, etc. To protect yourself and your savings from such a fate, make sure that you also have proper insurance policies and emergency funds in place. This may appear too much to ask from someone who is struggling to save. However, having proper safeguards in place is not less important than saving in itself. In short, you need to protect your savings as much as you do protect your income.

Rania Oteify, a former Gulf News Business Features Editor, is currently a Seattle-based editor.

Way to savings

Grow your disposable income

Tighten your expenses

Check investment strategies

Protect your savings

R.O.