As I was teaching a class yesterday to a group of expectant mothers going through some difficult financial times, the topic of savings came up, albeit briefly. And while those in attendance were in no position to save significant amounts of money, I shared what I believe is one of the most important principles of financial success I could give them. There are a few variations, but they are all essentially saying the same thing:
- Savings happens at the BEGINNING of the month.
- Financial security is a result of what we do at the BEGINNING of the month, not a result of what we have left over at the END of the month.
- Financial success happens EARLY in the month.
Timing is key to financial success. And I’m not talking about when to buy or sell stock. I’m talking simply of when we choose to save money. If we think that we can wait until the end of the month to save money, we’re living in a fantasy land. It seems to be human nature that whatever money we have in our checking account at the end of the month is fair game to be spent.
It also seems to be human nature that if we transfer money from checking to savings at the beginning of the month (or right after payday), we will adjust our spending for the rest of the month.
I believe that a habit of saving money regularly (automatically is even better) is the best indicator of an individual’s or household’s future financial success. I also believe that the most important component in a successful savings habit is not the amount we save, the percentage of our income we set aside, or how or where we save our money. These are important, true, but the most important determinant in building a successful savings habit is commitment.
Untold numbers of us have read and been positively impacted by Napoleon Hill’s book, Think and Grow Rich. It’s changed the way millions of people think about their lives, their current financial circumstances and their financial possibilities. With the new way of thinking about our financial success, we also need to accept the reality of the following statement:
Commit and Grow Wealthy!
Commit to save. Commit to automate our savings. Commit to put money in our savings early in the month, not at the end. Commit to save, and our savings will grow and grow and grow.
Good luck in your commitment. It will take faith, believing that in spite of potential obstacles, you can save and still remain financially stable (or regain financial stability).