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Are you a saver or a spender?

Figuring out if you are a saver or a spender seems to be a simple proposition. Simply put, if you spend more than your make, then there is no chance that you can be a real saver, since your liabilities will be greater than your assets.

If you have a BBT checking account with a balance that makes you feel good when you look at it, but at the same time you have a credit card bill that is higher than the bank balance, then your are fooling no one but yourself.

Rather than staring at a bank balance, one should think about saving in a more general way. Think of savings as an attitude or a habit that makes it more likely that you have positive financial things happening in your life. Having a savings habit doesn’t guarantee that positive financial outcomes will happen, but it makes it more likely that they are happening in your life.

In the following simple example, imaging that the following money habits or money situations are true:

  • Having a savings account with a high interest rate is better than having one with a low interest rate (note that banks typically give higher rates for accounts with higher balances).
  • Paying off a car loan is not as attractive as owning a car free and clear.
  • Paying off a card in full at the end of a month is better than carrying a balance.
  • Spending less than you make every month is better than having some months where you run out of money or have to dip into your savings.
  • Believing that savings is easy is better than thinking that savings is hard.
  • Saving for a special project or for your health or education is better than not doing so.

Reading about good examples stimulates your mind in one way, and looking at pictures stimulates a different part of you mind. You can check out at the infographic below and the words above and between the two you should be about to figure out what good money habits would work for you.

Savers Vs Spenders Infographic by Newcastle Permanent Building Society

Savings stop as the economy slows

Since the global economic recession of 2008 began, life has been difficult for the everyday American. The cost of living has increased and it has become tough to manage competing priorities.

Wage freezes, unemployment levels of 9.1%, a struggling real estate market and an increase in day-to-day living expenses have all combined to make it harder to survive, let alone prosper!

Yet most Americans do not have a safety net to help overcome these financially tough times. Statistics suggest that one in four citizens do not have any savings at all.

This is a worrying situation, as a lack of savings means there is no emergency fund for when the going gets tough. A range of financial products can help with savings, such as those offered by short-term loan companies.

The recommended amount of savings suggested by industry experts is the figure you would need to cover a minimum of six months without an income. Yet only around 25% of all Americans have such financial security and these tend to be higher wage earners in the 50-60 years age bracket.

In today’s economic climate, it can on the surface seem hard, if not impossible, to find the money to save. Many households are experiencing increasing levels of debt instead.

According to published statistics, Americans have just under £118,000 dollars of debt per household. The combined personal debt of all Americans reaches a staggering $2 trillion dollars.

Savings are essentially an emergency fund for when the unthinkable happens. We all like to imagine we live in a certain world, but illness and unemployment can affect anyone.

Warnings and forecasts of a ‘double dip’ recession are hopefully nothing more than a worst case scenario, but those with savings have a greater piece of mind.

How would you cope in such challenging circumstances? For many people, that can be a frightening thought. However, it does not have to be, because you can easily take action to create a safety net.

Take a long, hard look at your income and outgoings. What could you honestly live without each month? A treat meal or night on the town, or perhaps the latest gadget or game?

If you can save even a small amount each month, the dollars will quickly add up. $50 dollars per month multiplied by twelve months is $600 dollars per year to invest.

It may not sound much but once you start saving, you will find that the great feelings it creates become addictive! Soon you will be happily contributing more each month to your emergency fund.

After all, this is the basis of the American Dream, to rise up against adversity and carve out your own road to freedom and success.

There is no greater freedom than financial freedom that comes from you yourself making the effort necessary, as the odds of winning the lottery are narrower than getting struck by lightning!

People who create better financial circumstances for themselves and their families gain much more than an emergency money fund. They gain a peace of mind and feeling of accomplishment too. Create your destiny now.