Start Saving Now
Unless you are willing to work for “zero” profit.
Let’s face it: Americans are not the world’s best savers. Apparently, we think we don’t need to worry about having a “rainy day” fund because we assume the sun will always shine. Nothing could be further from the truth. Saving money is a biblical principle that helps insulate us from peril during times of economic uncertainty.
When we talk about saving money, we are really talking about planning. But in order to plan, you have to get serious about your money. You have to take control of what you have, and you must want to save.
But planning to save money is just the first step.
Someone once accurately said, “You can be on the right track, but if you just sit there, you may get run over.” Once you plan to begin saving some money, you are definitely “on the right track.” But if it just remains a plan that never gets put into action, it will never bear fruit.
Once you do begin a savings plan, you will often find distractions along the way. Remember, the road to success is marked with many tempting parking spaces. Something will always come up to compete with your plan to save. This is why I recommend automating your savings plan. This is easily accomplished now with direct deposit and automatic debiting of specified percentages of your paycheck into your savings account.
|Jerry says: “Don’t get distracted! There are no shortcuts to creating financial success.”|
Perhaps some of you already have a systematic savings program. Great! For others, saving money on a regular basis may be a difficult habit to form. This is especially true if it seems that you are barely getting by right now without saving any money. If this describes you, then creating a systematic savings program is one of the most crucial financial steps for you to take right now.
When I first started trying to save a percentage of my income, I became very easily discouraged. Something would come up every month to prevent me from putting money back in reserve. It was not until I learned about something that I now call the Profit Principle that I truly became motivated to save money.
So what is the “Profit Principle?” Let me explain.
Several years ago, while reading through the Book of Proverbs, a verse literally jumped off the page. Has that ever happened to you? The verse that caught my eye was Proverbs 14:23. It says: “In all labor there is profit: but the talk of the lips tendeth only to penury” (ASV).
In particular, the phrase “In all labor there is profit” kept rolling around in my mind. I was aware that the definition of the word “profit” was essentially the amount of income left over after expenses. It was at that moment that I discovered the Profit Principle.
The Profit Principle simply says this: An individual’s profit from his labor or work is equal to the amount of money saved.
In mathematical terms, it’s PROFIT = SAVINGS.
The Profit Principle literally blew my mind. I realized that each month that I did not save money from my paycheck was a month when I did not earn a profit from my labor!
Suddenly, I recognized that I was going to work at my job every single day for zero profit! Who in their right mind would do that?
Apparently I did.
Today, large corporations operate their businesses for maximum profit. Additionally, small business owners are dependent upon their profits to survive and thrive. So why should you view your job any differently? Would you ever agree to work at a job without earning a profit? Of course, not! Yet, millions of Americans work for “zero profit” because they save nothing. I should know, because I used to be one of them!
To make matters worse, many Americans not only earn zero profit from their labor because they do not save, but they actually agree to give away all of their profits to credit card companies and other corporations.
How is this not a form of voluntary financial slavery?
This financial strategy will help you take back the most basic of your fundamental financial rights — your right to earn a profit from your labor. It is biblical, and it makes common sense that you should have control of the profits that are created as a result of your hard work.
After I discovered the Profit Principle, my view of money was drastically changed. Suddenly, the distinction between my “wants” and my “needs” came sharply into focus. I began to prioritize and cut the “fat” from my monthly budget. Things that used to be important to me, such as maintaining a particular image or keeping up with the Joneses, began to fade. (After all, in case no one has told you, the Joneses are broke. So why try to keep up with them anyway?)
I urge you to really think about the Profit Principle in your own financial life. Are you currently making a profit from your labor? Or are you giving it all away to the corporations who have deceived you into believing that you cannot survive without all of their “stuff?”
After you decide that it is time to start earning a profit from your labor, the next step is to: determine your desired monthly profit rate.
Unless you live in your parent’s basement rent-free, then it is virtually impossible for your profit rate cannot be 100 percent. So what is a realistic, and yet effective, profit rate? (In other words, what percentage of your monthly income should you strive to save each month?) Personally, I believe the minimum amount that anyone should save is 15 percent of monthly income.
Why 15 percent and not 10 percent, as most financial advisors recommend? I suggest 15 percent because of the various eroding factors that affect our money. For example, the combined impact of inflation and taxes alone are a good enough reason to save more than 10 percent. These two factors have a tremendous wealth-destroying effect and must be fought aggressively. Those who recommend a 10 percent savings rate may have good intentions, but that percentage will barely keep your financial head above water over the long run when inflation drifts even higher and when, not if, tax rates increase.
I would recommend that you begin by setting your profit (savings) rate at 10 percent and then slowly raise it to 15 percent. Others may be able to set their profit rate higher at 15–20 percent. (Many people living in Asian countries, especially in China, have savings rates of over 40 percent!)
But what if you are just barely getting by right now with very little money to spare? No problem. Just set your profit rate at 1 percent right now. Then, every month thereafter, you can attempt to raise your profit rate by another percentage point. This will allow you to ease into this strategy without throwing your entire monthly budget into chaos. With this approach, you could realistically have a 10 percent profit rate from your labor by the end of the year.
The important thing is to begin saving money now and saving it systematically. It’s time for you to finally earn a profit from your labor!
Before proceeding to the next step, be sure that you:
|– Decide to begin monthly systematic saving plan. (If you are married, read this article together and make the commitment together.)||– Determine your minimum monthly profit (savings) rate. Make a minimum of 15% your ultimate goal.|
When you completed this step, you are now ready to advance to the final step of Level One which is to build two months worth of liquid savings.