Have you ever consider how much money you have earned over your working life. Even if you do not have a really high paying job, chances are that the amount is impressive. For example, if you earn an average of $25,000 per year, in 40 years you will have made $1,000,000. Or if you earn an average of $45,000 per year, after 40 years this would mean you earned $1,800,000. Now consider how much of that figure you have saved.

Of course, everyone knows that you have bills to pay. There are home and shelter payments, food to buy, taxes to pay, monthly utilities, and so on. But it is still important that you have a savings portion as well to be totally comfortable and in control of your finances.

You need to have a savings plan that includes three accounts. The first is for an emergency fund. Life always gives you little challenges to overcome and that is where this fund comes in. This fund should be set up in case of an emergency, such as the loss of a job, sickness, a major household repair or even a need for a new car. Having an emergency fund can protect your family from financial disaster. A good rule of thumb is to have at least the amount of three months salary in your emergency fund.

The next account you need to set up in your financial plan is for short-term savings. This fund takes care of your short-term ‘wish’ list. Say perhaps you want to purchase that big screen T.V. or want a fancy new car (emphasis on ‘want’ and not ‘need) then this is the place where you can save up for that item (instead of simply putting it on your credit card). You can also use this fund for that family vacation you may want in the near future. Using a separate savings fund in this way will enable you to avoid the ‘credit card trap’.

You should also set up an account for long term savings. Long term savings could include not only saving for your retirement, but also saving for university or college for your children. Here it is not necessary that the funds be immediately accessible, but the account should be set up as a long-term investment.

The best way to save into any of these accounts is to put your savings on ‘automatic pilot’. That is to say that a set amount each month is directly deposited from your pay check into your savings account. You will find that you do not even miss the amount because you never even see it. And, what you don’t see, you cannot spend.

Handling your finances wisely can help you be comfortable in your everyday life. As shown, you do not have to earn a great deal of month yearly to be able to have some of the things on your ‘wants’ list. With good planning and a savings plan you can achieve what you want.