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Habits play a vital role in saving and investing money, thus making an individual’s life prosperous. In general, peoples correlate habits only with non-financial aspects of life, which is only a half-truth.
We all know that saving money is very essential to manage various financial aspects of our life. Saying is easy than doing. Advising one to save money without describing how to save would be somewhat like drawing a picture of a horse and writing under it, “This is a horse.” It is obvious to all that saving money is one of the essentials for success, but the big question uppermost in the minds of the majority of those who do not save is: “How to do it?”
Saving money is solely a matter of habit.
It is literally true that man, through habit, shapes his own personality. Through repetition, any act in a few times becomes a habit, and the mind appears to be nothing more than a mass of motivating forces growing out of our daily habits.
When once fixed in the mind a habit voluntarily urges one to action. For example, follow a given route to your daily work, or to some other place that you frequently visit, and very soon the habit has been formed and your mind will lead you over that route without thought on your part. Moreover, if you start out with the intention of traveling in another direction, without keeping the thought of the change in routes constantly in mind, you will find yourself following the old route.
Public speakers have found that the telling over and over again of a story, which may be based upon pure fiction, brings into play the role of habit, and very soon they forget whether -the story is true or not.
Effect of Habits (Poverty or Prosperity)
The majority of people go through life in poverty and want because they have made destructive use of their habits. Those who remain in poverty seldom realize that they are where they are as the result of their own acts and habits play a very important part in that.
Put in your mind the thought that your ability is limited to a given earning capacity and you will never earn more than that. By continuously having this thought in mind, it will set up a definite limitation of the amount you can earn, and your subconscious mind will accept this limitation. Once your subconscious mind accepts this limitation, the opportunity will no longer knock at your door. You will live in fear of poverty; your doom will be sealed.
Formation of the habit of saving does not mean that you shall limit your earning capacity; it means just the opposite. The habit of saving will not only conserve the amount you earn, in a systematic manner, but it also places you in the way of greater opportunity and gives you the vision, self-confidence, imagination, enthusiasm, initiative, and leadership actually to increase your earning capacity.
Action plan
Set a definite chief aim for yourself, in your mind, an accurate, definite description of that which you want, including the amount of money you intend to earn. Your subconscious mind takes over this picture that you have created and uses it as a blueprint, chart, or map by which to mold your thoughts and actions into practical plans for attaining the object of your chief aim, or purpose.
Through habit, you keep the object of your definite chief aim fixed in your mind until it becomes firmly and permanently implanted there. This practice will destroy the poverty consciousness and set up, in its place, a prosperity consciousness. You will actually begin to demand prosperity, you will begin to expect it, you will begin to prepare yourself to receive it.
Once the above becomes a permanent thought process through the power of habit, focus more on increasing your earning power. As your earnings increase, your savings will, likewise, increase in proportion.
By ever urging yourself on and demanding of yourself increased earning power, on the one hand, and by systematically laying aside a definite amount of all your earnings, on the other hand, you will soon reach the point at which you have removed all imaginary limitations from your own mind and you will then be well started on the road toward financial independence. (Source: book ‘Law of Success’ by Napoleon Hill)
Major Advantages
# Managing Emergencies:
As the name suggested emergencies are always unexpected. Saving in the form of No Udhari (Borrow) Fund helps here. You do not fall into the trap of debt, by borrowing from friends, relatives, and banks.
# Situation of job loss:
Job loss is usually traumatic. It can leave an individual as well as a family in a huge crisis. Saving can be a great support at the time of job loss.
# Create Investment opportunities:
Saving creates great opportunities for investment. Many a time such opportunities strike and can be availed with a minimal investment amount like buying shares when there is a steep fall in the share market. If you have savings, you can make fortune at that time.
# Managing down payment for a mortgage:
Any financial institution asks for a down payment of a certain percentage before the loan is approved. Many a time I have seen people taking a personal loan to manage this down payment as they are not having saving in place.
# More comfortable in retirement:
Unless one is having the habit of saving and investing, it will be very difficult to retire in peace. I have seen people working at very old age as they are having a constant fear of being broke if they stop working. One more probable reason here is debt becomes a permanent part of their life.
# Less or no use of Credit Card:
You can avoid the trend of purchasing each and every item through a credit card. If you are not disciplined enough on the timely payment of credit cards, then you are inviting trouble. The interest rates are skyrocketing after the payment due date even if you pay the minimum amount as stated in your credit card bill.
Do not save what is left after spending, but spend what is left after saving. – Warren Buffett
