It’s not a secret that the wise ones among us save money for their future. Those who stow away savings can be among the more healthy and vibrant people we know in old age. Think about the opposite for just a moment. If you saved little to nothing throughout your life, then the golden years would actually be quite bleak, and less than golden.

I’ve heard some say that savings won’t matter because you’ll be old. The average person lives to be into their 70s and the average retirement age is a little over 65. This means anywhere from five to fifteen years living off what we save now and our social security. So even if you save a little from each pay day, your golden years will not be limited by shortsightedness.

A MoneyCentral article written by Liz Pulliam Weston describes the best advice on saving money. The money saving tips come from MSN’s money forums. They are some choice nuggest like "Pay yourself first" and "Think of the true cost." All of the advice was sound, but the one that stuck out to me as the most useful would be to "Pay yourself first".

Practicing Paying Yourself First

We likely pay a mortgage or a rent payment every month. We regard this money as sacred, right? When we calculate how much we’ll have to spend on groceries, gas, and entertainment we’ve already subtracted out the living space money. We don’t want to be living on the street afterall. We have to pay it. This should be the type of committment we have towards saving money.

How do we get to a point where paying 10% of our income to a personal investment becomes necessary? I like lists, myself. I write down the reasons why I should do something so I have a reference point when I don’t want to do it later on. You could create a list outlining why you should save ten percent of your earnings in a monthly period. Or you could try any other way you deem effective — whatever the case, save the money.

If we pay ourself ten percent of our income over a thirty year period, that will account for a large chunk of money. Who wouldn’t want that?

Discussion Questions

How do you stay on track with savings?
Do you pay yourself first?

I received a call this past week while in the office. The person on the other end of the phone was jovial, charismatic, and selling me something. I could tell by their introduction and approach. Something in me shut off at that point. I have an aversion to buying or being sold anything over the phone. I’m more of a research and then make a decision type of consumer. This person, though, was selling me stock opportunities — critical financial moves he felt could make me significant returns. I let him know I probably wouldn’t take his advice, having only talked to him over the phone and not having a face-to-face with him. He hung up.

This story is not unique. Millions of Americans have been looking for ways to invest their money with the help of strangers. These financial professionals take the money we earn and put it into stocks, bonds, mutual funds, and IRAs. We often times give them our money with only a small amount of research. Although it is true many of these professionals have our best interest at heart, we should still be organized, informed, and ready to move our money if need be.

An IRA makes sense for a certain amount of annual investment. Mutual funds also provide significant returns if done correctly. It’s important to diversify as well. Don’t let your money languish. If you’re really ambitious you could take five or ten percent of your investment and research stocks to buy and sell through sites like E-trade. This is not for the faint of heart, and you really need enough time to do the due diligence on the stocks you’re purchasing. It can be a nightmare if done incorrectly.

Our future’s may be brightly lit with retirement funds and IRA earnings, but we really need to know where and how each fund and investment affects us now and when we cash it out. Where does your money go? Do you know all you need to know about your investments? Do you have a financial professional to consult?