Money makes the world go round. If you don’t think this is right, try living a poor life! You will understand why money is important, and why money deserves to be respected. Money can secure your future.. yaba yaba yaba… I know … its only money. But try living without it, you will see! And while you think about it, please think about how to make financial savings for your future. It is very important.
Part of living a stress-free life is to be sure that your future is well taken care of. By this, I do not mean that you have to be in control of everything that happens in your life. In real life, that is actually not possible. What we can do is to take some initiative to steer our future in the direction that we would like it to take. What better way is there than knowing how to make financial savings for the future?
Saving money does not necessarily imply that you live a boring life in an attempt to secure the little that is left. No, you can still enjoy life and manage to save your finances in the process.
There is more to saving money than keeping money in the bank or investing it. You need to understand money, to understand that when you spend it, it is gone. That is called a liability and that when you invest it wisely, it will bring you more.
Here are a few things to help you make more financial savings to secure your future:
Pay off your debts and start building financial savings
Believe me, you will never be free until you are clear of all debts. That is why you need to keep all your debts under control. By this, I mean that you have to know whom you owe and how much you owe them. Start by paying off the mortgage. This is a long-term financial commitment since you will have to pay your mortgage for more than 20 years, but then, once you are done, you will be a happy homeowner. So a mortgage can be termed as a good debt.
Your property is an investment. Every month that you put some money in, you actually increase your stake in the property and so on. Make mortgage payments the first priority for you.
Good debts and bad debts
You will never be able to keep aside enough financial savings for your future if you are plagued by debt. However, if you cannot completely get rid of debt, you need to know about the good and bad debts. Now, if you borrow money to expand and already existing business, that is a good debt. If you borrow money to invest in property, that is good debt. If you borrow money to go on vacation, that is a bad debt and so on! Good debt should make you more money such that you are able to pay it off and keep the difference. It´s money borrowed to invest in an asset. Bad debt doesn’t make you more money. Bad debt is borrowed money spent on depreciating items – liabilities.
What are your short term and long term goals?
Being clear on your goals, both in the short and long, term will determine your spending and saving patterns and help you in how to make financial savings. Let me make it clearer. By saying no to something today, it could be in preparation of a big yes in the future. So, have goals that guide the path that your life will take. With these objectives at the back of your mind, it becomes easier to exercise discipline for financial savings. Of course, since life is made of a bigger picture split into many smaller pictures, every short-term financial plan should be geared towards the achievement of the long-term plans.
Learn the difference between assets and liabilities
This is an important step in how to make financial savings. To build your financial freedom, it’s essential to understand the difference between assets and liabilities. According to Robert Kiyosaki, writer of Rich Dad Poor Dad, assets make you money (profitable investments in real estate, stocks, bonds, business shares) whereas liabilities eat your money without giving back.
Typical liabilities are car loans and any other expenses on depreciating goods. Your aim should be to increase your passive income from your assets above your expenses. Once you reach that point, you have achieved nothing less than true financial freedom. And that surely is a goal worth striving for.
Consider making financial investments
In order to build up your assets, you can invest in stocks, bonds, or any other financial investments. Depending on your financial ability, you can choose short-term or long-term investment strategies. Knowing how to make financial savings is important for a bright future.