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You Don’t Have to be Rich to Accumulate Wealth
The MMI Online Articles are designed to inform, assist, educate and alert consumers.
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Our national savings rate has dipped into negative territory. While this may be discouraging, the fact remains that establishing a savings cushion is imperative to your financial well being. Fortunately, the experts at Money Management International and America Saves know that you do not have to be rich to accumulate wealth. Unfortunately, many consumers do not believe this to be true, and are easily defeated by their finances, and their spending habits. Surveys released by the Consumer Federation of America and the Financial Planning Association found that more than 20 percent of Americans think that winning the lottery is the most practical way for them to accumulate wealth.
If you are overwhelmed by the idea of amassing “wealth,” start small. Begin saving a minimum of ten percent of your take-home pay. To make it easier on yourself, you can start today by calling your bank or credit union and arranging for the money to be automatically deducted into a separate account.
As motivation, counselors at Money Management International offer the following four reasons why establishing a savings cushion makes good financial sense.
Things don’t always go according to plan. Unfortunately, bad things sometimes happen to good people. In fact, bankruptcy filers often site an “unforeseen” event as the cause of their financial demise. By learning to expect the unexpected, you can keep a minor financial setback from turning into a major financial crisis.
No one cares more about your finances than you. If you seeking someone to look out for your financial best interest, it is time to take a look in the mirror. Relinquishing control of your financial future is a mistake. No one—not even the government, your employer, or your accountant—cares as much about your finances as you do.
A little money saved can add up to big savings. Making a down payment on a major purchase can really pay off. For example, making a down payment of 20 percent or more on a mortgage will likely afford you more attractive overall terms. Furthermore, having available cash can help you avoid borrowing from expensive credit cards in an emergency.
The eight wonder of the world is compound interest. If you put $1,000 in a savings vehicle that earns 8 percent interest, you will double your money in less than 10 years. In this example, a penny saved is two pennies earned.
Finally, make a commitment to pay down debt. Reducing your debt allows you the freedom to make smart future financial choices.
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