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“I cannot save any penny cuz I’m broke”

It is not true. Nobody is so broke that he or she cannot save. When I was a little boy I learned saving myself. I always wanted to be a rich man when I would grow up. My mom concerned about me that I was growing into a greedy person or so. At least she though so. She always said “You are like your uncle. He is also greedy for every penny.” For me it was a compliment.

Saving money would be the first step every new investor, young or old should do when she thinks she is broke. However the very first step it is not to save, but start working on changing our own mind about money. It really is in our own head. People want everything and they want it now. Even my sister says why saving money now, she wants to live her life now and starts saving later. Well, what is it later? In her 60s? Everybody who lives from paycheck to paycheck doesn’t realize that saving is a long term program and it doesn’t make anyone wealthy overnight. There are some advisers who honor making your own business over saving such as Robert Kiyosaki and I must admit that he has some good ideas in his books. However I remember his words in a TV show: “… work hard … save your money … retire … ” or similar (I am adding and die poor). He is advocating a personal business over working for somebody and saving money. In some point he is right, but even though an investor who starts his own business he should have his saving plan no matter what otherwise such investor may end up living from paycheck to paycheck even in his own business. And believe me I know couple examples.

I made my own business and I got pretty rich, but this is not a matter of this post. What I want to show is that everybody can start from nothing. Same as I did. Once when I was a young man about 15 or so old, second after I divorced, left all my property to my ex-wife, moved and started over. After five years I can consider myself rich again. Of course not as rich as I was originally, but still well done than five years ago.

The very best book I can recommend to everyone who wants to change her life is Money Is My Friend by Phil Laut. It was my cook book when I was 15. This book taught me how to deal with money, how to make budget, follow the rules etc. Thanks this book I learned my savings sense. I opened my first bank account in my teens and people around me thought I was a freak. As a boy I was working in summer break for my neighbors for small pennies and every day I put the money to my bank account. When I got older I started working for a local post office during summer and I was saving any tips I got as a young delivery boy. Later I opened several other bank accounts and each had its own purpose. Exactly as the book says. Even today I follow the principles from the book. I have several checking and savings accounts, and I have several credit cards as well. Companies when dealing with my credit score mostly refuse me because I “have too many credit cards with balances.” It is because they completely do not understand my saving philosophy. I do not blame them, nobody told them about it. Each card has however its own purpose too. One is dedicated to car expenses only (such as repairs, gas, etc.) another for personal care, etc. This allows me to keep balances small and affordable to pay.

Every single day as a boy and a student even as a young man I was thinking and asking one question to myself: “How can I get rich?” This question helped me searching for opportunities and it helped me to change my mind regarding personal money management. After all I learned making budget first when dealing with my personal money and stick with it no matter what, no questions. Sometimes it was hard to do it. I saw new books in a local book store which I wanted and it was hard to convince myself that I had now funds available yet, because a dedicated account was empty. It was at the time when I was a student and my only income was my parents support and money I made during summer work. Even with such limited income I could save a bunch of money so why not a grown up with a regular salary?

I believe, everyone can do the same. Just start working on it. Put this goal to a paper and create your first small budget. It can be a simple one. Put down what is your income on one side of the paper, what are your expenses on the other side. Keep all your bills and checks so it would be easy to keep track of all expenses and easy to create and adjust the budget. Try find where you can save. For example I realized that I can save almost $200 a month by stop lunching out and have my lunch at home. After analyzing expenses and finding your money holes you can seal them by changing your mind. Then you would find that you can afford to put aside $100 a month for example. This is enough to make a fortune later. Every business needs a starting capital, even your own.

After realizing that it would be a piece of cake to put $100 aside, open a savings account, name it “Emergency-short term” and start transferring money. The best way to do it is to pay yourself first. Whenever you get a paycheck from your employer or whenever he transfers your salary to your regular checking, transfer your own salary of 100 of dollars to the new savings account the very first moment after receiving it. I made a goal to have a short reserves up to $2000, which will be for emergency payments, which may exceed my regular paycheck for example new tires or lawyer payments or accountant or whatever. My second savings account is called “Emergency long term” and this keeps money, which would be needed in case I lose my job until I find a new one. Typically it is recommended to have about three to six months of last salary to keep a living standard for three to six months after losing job. I plan to keep $30,000 on this account and I am still building this reserves. The rest of my money goes to my investing account and ROTH IRA. If you want to build your emergency savings along with an investing account so you can start investing soon, you can rotate contributions. One month send the money to the savings account, next month send it to the investing account.

As my sister said, why saving now and lose my life by refusing all its temptations since I am young. I still live my life satisfactory, spending money for whatever I want while building my financial independence. Everything is in our own head, start changing it first.

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