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’.
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Most people spend money on things that they don’t need. Learning to determine what is important to spend your money on is key to helping control your debt. What you need to do is to adjust your priorities and spend money on the things that are really important.

The first thing you need to do is to find out what your money is presently being spent on and then develop a plan of action to spend your money wisely. A great way to do this is to write down everything you spend money on for one month. Take a little notebook and jot down the amount and what the money is spent on every time you buy something. It doesn’t have to be a complicated spreadsheet but just a rough record of what you are spending.

At the end of the month, you will probably be amazed at how those little items can add up. You will probably find a number of things that you didn’t realize added up to so much—things that you will be able to save or change your spending habits on.

Let’s take an example of you and your spouse buying a pop at work each day. Suppose the pop cost $1.00 each, so that’s $2.00 each day. If you multiply that $2.00 times 20 work days in a month, that adds up to $40 per month spent on pop. $40 per month times 12 months in a year is $480 per year just spent on pop. If you change your spending habits by purchasing a 12-pack of pop at your grocery store and taking a pop each to work with you, you could possibly save a lot of money and the only thing you really changed was the carrying of the pop to work.
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