One of the problems, many people have, is their inability to save.
Saving is necessary if an investor is to establish a reasonable capital base to make the whole business of investing worthwhile.
In this article we are going to suggest three painless ways to save, without involving changes to lifestyle or personal budgets.
Loose Change
A friend was involved in a charity door knock.
He called at a house that looked a bit run down, and the garden not cared for. He decided to ring the doorbell anyway and was not surprised when a rough looking young man opened the door. The young man explained that he had saved some money for this particular appeal as he strongly supported the work in which this charity was involved. He asked my friend to be patient and he would produce his donation.
My friend could not believe his eyes when the young man came back to the door with a large glass cookie jar filled with coins. As the young man required a receipt, my friend and the donor set to to count the money. My friend was absolutely astounded at both the total amount and the generosity of this young man. He explained that he threw all his loose change into the jar every night and, while it was true that he did take some money out during the year, his main purpose was to provide a donation painlessly each year for this charity.
This reinforced the idea in my mind how loose change can accumulate over the period of a year. When you think of it, one dollar a day saved amounts to $365 in a year. Few people would miss this sum each day but would be very happy to have an extra three hundred dollars by the end of the year.
If you have trouble saving, why not try putting $1 per day aside for one year to see how much money you can actually save.
Perhaps better, throw your loose change each evening into a large jar and see how much this amounts to in a year.
At the Supermarket
Two elderly women, at different times, complained to me about their husbands.
One man used to keep taking grocery items out of the trolley and putting them back on the shelves, with the question:
"Are you sure we need that?"
The other woman's problem was that her husband, who was never involved in the shopping while he was at work, could not get over the fact that prices had risen substantially since he was a schoolboy. He could remember when this item only cost a tenth of its present price, that item only cost a quarter. His question was always about paying these 'high prices.'
However, it is possible by shopping carefully at the supermarket to save substantial amounts of money, year in, year out.
We are not talking about reducing the amount purchased, but rather seeking value for money. By choosing the product carefully, it is possible to obtain good quality at a lower price so savings can be achieved in this way. Unit pricing is a great help in this regard.
There is no point in purchasing an item because it is cheap and then regretting it, when it is being consumed. That can only be described as being false economy and defeats the purpose of the exercise.
High Interest Accounts
When savings are deposited into high interest accounts, it is surprising how quickly the amount can increase through compound interest.
Care must be taken to ensure that the account chosen fulfills all the requirements of the investor. However, but by shopping around among the banks and other financial institutions, it is possible to locate accounts which can provide the features required. Many of these accounts pay attractive rates of interest, with little or no risk.
Used carefully, these accounts can make the savings grow substantially and, over time, provide a sound base from which to diversify into other types of investments such as stocks.
