Saving is the foundation of financial success.  If you are looking for financial freedom and economic security, the answer lies in saving.  Saving is the practice of putting aside money now for use some time in the future.  The difference between saving and savings is well worth noting.  As noted earlier, saving is the act of putting money aside.  Savings, on the other hand, is the amount of money that has accumulated after a certain period of saving.  An illustrative example will help.  If you save $100 a month for six months, at the end of six months, your savings will be $600.    

Difference between saving and investing

It is important to be able to differentiate between saving and investing.  Too often, the two concepts are confused.  Although they both play crucial roles in your lives, they do so in different ways.  Investing is the process of using your savings and other resources to purchase assets that will earn a return in the future.  An asset is anything of value that you own.  They include items such as bonds, stocks or shares, and real estate.  Other things being equal, the more you save, the more you can invest.   

The amount of saving

The question as to how much you should be saving seems to be a fair one on the surface, but on further examination, it is not so easy to answer such a question.  The fact is, we all have different needs, goals, lifestyles, etc.  A saving plan that is just right for Jack may not be right for Jill.  The amount of saving will depend on factors such as your income, expectations of future income, your family situation, your objectives, etc.  However, there is a popular rule of thumb that you can use as a general guide.  It is called the 50/30/20 rule, and it states that 50% of your income should be allotted to necessities, 30% to wants (things you would like to have), and 20% to saving.  The key is to set a saving target that is realistic for you.

Saving requires discipline

For many of us, saving is not automatic.  We may not have grown up in an environment where saving money was the rule rather than the exception.  Once we accept the view that saving is desirable, we have to resolve to develop a pro-saving attitude.  It requires discipline.  There will be temptations to derail us, but we must have the discipline to resist the temptations and stay on course.

Ways to facilitate saving

Here are some ways to make saving easier.

1. Make a shopping list when going shopping.  This will minimize impulse buying.

2. Reduce television viewing.  Many times the TV is on and there is no one watching it.  Turning it off saves money on your electricity bill.

3. Turn off the lights when not in use.  This will reduce your electricity bill.

4. Practice the 10-seconds rule.  Before you purchase any item, take 10 seconds to think of reasons why you should not purchase the item.  This practice will prevent you from spending money that you don’t need to spend and prevent buyers’ remorse.  

5. Avoid spending excessively on children.  Children love things—toys, clothes, parties, etc., but what they love most is your time.

6. Substitute water for other types of drinks.  Juices and sodas are significantly more expensive than water, and often, water is healthier.

7. Reduce or eliminate alcohol.  Generally speaking, alcoholic beverages are expensive.  You can save a bundle by eliminating or reducing your use of alcohol.

8. Drop the smoking habit.  Smoking cigarettes is an expensive habit.  If you discontinue this habit, you will save money now and probably in the future by virtue of being in better health.

9. Shop for items immediately after a holiday.  For example, on Boxing Day, decorations go on sale for just a fraction of the regular price.  You can make great savings here.