On one beautifully muggy October day, my mother sold her house to a bargain master who ended up shaving the skin off the price of a house that my father designed and built by hand. This Grand Master (read: LIAR) ended up getting quite a good deal on his investment. This was quite a day for me, having lived there from my 2nd birthday until my later years as a young adult. This house was the best present a 2 year old could ever have. How could my mom simply toss away this home that had been lived in by only us?  Well that thought quickly dissipated as it was happiest moment my mom had in years, as the mortgage price was too much to handle since the majority of the house was unoccupied.

On that day I inherited a very small fraction of the net worth of the house. In fact, all of my siblings did. (She’s a gracious woman.) I took the money and realized that I had to save it. I didn’t have a car at the time, (and for the record I still don’t) but I decided to invest the money, save the money and put it into a savings account, or make some business decisions and attempt to invest it into a worthwhile startup that I was heavily involved in.

Life took over during that small time and I ended up forgetting exactly what to do with the small sum. I would stare at the sum every time I received a new check every 1st of the month, and on the 15th. If  I had a savings account right off the bat, oh man! It would have been so much easier to save the money. There would have been no question as to what to do with it in the meantime while I was waiting to know exactly what to do with the amount itself. I missed out on $370 by simply being lazy.

Several of you do not have a savings account. A savings account is very important. It is the number 1 way of investing in your future money. A savings account is not just place to store your hard-earned money. It’s a way to compound interest it’s way to several thousand dollars worth of interest simply by doing nothing at all. I can’t emphasize this enough: You do absolutely nothing, and you earn money.

While it may be tough to actually earn enough money to save it, the best advice I can  give is this:

  1. Immediately put away the cash as soon as you get paid. Some of you get paid once a week. Some of you may get paid every 15 days. No matter what, put money away each and every time. The negative psychological effect is diminished should you transfer the money to the savings account immediately.
  2. Specify an amount of put away. Stick to it. An emergency is the only case in which it is OK to go ahead and forgo the savings investment. Note: A new sofa, Nintendo Wii, or dinner with the best looking girl/guy in the company is not a reason to forget the savings investment.
  3. Think in terms of the formula “The total amount I have for spending is MY PAY - TAXES - MY SAVINGS.” Many people forget that they do not make “$32,00″ per year or “$80,000″ per year. Taxes are a major part of it, but so should be the savings account investment. Quick Math: You get paid twice a month at $1500 in order to total $36000 a year. Assuming that the the IRS takes out $300, that means you make $7200 Less each year. That equates to $28,800. Assume that the savings contribution is about the same.

The next step is to find a proper savings account. That is the next big step in finding the best account for your needs and will be covered in another article.

If there is one thing that you walk away from by reading this article, it’s this:

“MY PAY - TAXES - MY SAVINGS. = MY SPENDING AMOUNT”

Thanks for reading.