Our savings determines the amount of opportunity we will have in the future and keeps the power of interest on our side.
The first principle to properly building, protecting, utilizing, and transferring wealth is to save at least 15% of gross income.
People that don’t save, still spend. Unexpected life events still happen. Without savings a person has to borrow money for most irregular expenses, thereby losing interest and opportunity costs to financial institutions over his lifetime. He will never be in a position to invest in the very best opportunities that come about throughout his lifetime. He’ll have no cushion for the day he loses his income, due to job loss or sickness. This is where the old adage applies, “he who fails to plan, plans to fail”.
The first question relating to savings is, how much should a person save? We teach that people should save 15% or more of their income. For many people, this step seems nearly impossible. Why? Most people have poor habits when it comes to managing their money. They have the habit of spending everything, and sometimes more than they earn. If your client doesn’t already have the habit of saving at least 15% of their income, the Snapshot model will help identify opportunities to save more.
Promote the concept of saving and continually increasing the percent of income saved. Any time clients have the opportunity to increase savings, they should.
As with any enduring successful program, effective tracking and the ability to measure is essential. Personal Financial Snapshot gives you the tracking you need.