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Key to success Income Saving Spending Investing Donating Spending plan Resources Saving Once you know your income, the next category to consider is savings. “What?” you might ask. “Isn’t a spending plan meant for planning what you spend?” It’s true that plans help you manage your spending. But they also help manage what you save. Wise financial experts often say, “It’s not what you earn that matters, it’s what you keep.” All of the income in the world won’t help you if you spend every dime. If you make a million and spend a million, what are you left with? Zero. In a way, you’re no better off than the person who makes $100 and spends $100. You might have bought a lot of stuff in the process, but you’re still left with nothing. The easiest way to save money is to follow one simple principle: pay yourself first. Every time you receive any income, make a point to save some. A good rule of thumb is to save 10 percent of all you earn. Some people even save 20 percent or 50 percent! When you create your budget, make “savings” your first expense category. Put your savings away before you spend any of your income. Saving is like writing a paycheck to yourself. It shows that your goals are important. Why save? Saving is important because it helps you care for yourself over the long term. If you’re lucky, you’ll live many years. There may be times when you’ll need extra money for an expense you didn’t expect. There may be times when you’ll need money for a special purchase. If you’re a good saver, you’ll have that money when you need it. Plus, having savings helps you to feel secure. When you’ve got money saved, that’s just the point—you have it. It’s best to develop a balance between spending and saving. Both are important money management skills. You may wish to have two savings accounts, or even three. One account can be for savings that you never touch. You can let that savings build up so you’re ready to invest one day. (For more on investing, visit the Investing section of this Web site.) A second savings account can be for a big purchase. You might wish to save for a car or a vacation, for example. The money might take a year or more to save. If you start now, your funds will grow before you know it. A third savings account might be for short-term purchases. These purchases can be saved for in less than a year. You might want to buy a special pair of shoes or a ticket to a concert. A good savings plan will help you reach your goals. You’ll be amazed at how easy it can be! RETURN TO TOP INSTRUCTIONS | YOUR MONEY | YOUR COMMUNITY | NONPROFIT | FAMILY GIVING | RESOURCES PRINTER FRIENDLY | TELL A FRIEND ©2006 Learning to Give