Saving Intentionally
Saving should be an intentional action every month. There are three areas that you should be planning for by intentional saving. These are by no means the only areas. I will cover some other important areas in later videos.
The three areas are:
1) Pleasure spending - You can call this area an allowance if you want. This includes your entertainment, special dining out, getting a soda at a gas station, etc. Plan for this in your budget, so you can control the amount spent. This will help keep integrity in your budget, so you don't splurge and make it a habit. As you increase your monthly disposable income (money after all expenses are paid), you will be able to spend more freely over time.
2) Emergency fund - Start by building a small amount of around $1,000, but make it an intentional part of your plan to build this fund up to 3-6 times your monthly expenses. This will carry you through inevitable difficult times that will come to you.
3) Investment acquisition - If you want true financial freedom then this is a must. Budget each month for a surplus specifically for acquiring new assets, items that put money in your pocket every month. This could be rental real estate, both residential or commercial, or businesses you own all or a significant portion of. This money is for your down payment to secure funding for the majority of the cost of the purchase.
For the emergency fund and the investment acquisition fund a money market fund can be a good choice since it is liquid and also yields a higher return than a standard savings account. A regular savings can work for well for the allowance savings.
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