How to increase savings

Savings are the seeds of financial prosperity and freedom. Access to savings can take away a lot of heartache and anxiety in one’s life. Savings are like a life boat and come in handy when things get tough. They also represent the cheapest form of capital for your investments.

There are primarily two ways to increase savings. The first is to increase your income. Increasing incomes involves getting a job, becoming self employed, starting a business or investing. Primarily you have to acquire more profitable skills to be able to increase your incomes. A profitable skill is one for which an effective demand already exists. Effective demand means that someone is willing to pay you a reasonable amount for your level of skill.

The right skills will get you the right employment or self employment. The right knowledge and skills can also enable you to start a business or make the right investments. The beauty is that it is now quite easy to acquire new skills through the internet. With a little bit of hard work and resilience you can easily change careers to something more profitable.

The second way to increase savings is by decreasing expenses. Decreasing expenses involves rationalizing your lifestyle to fit within your means. It involves setting your own standards. It means being comfortable in your own skin. It means living life on your own terms. Someone driving a better car doesn’t bother you. Having a tiny TV instead of smart TV is OK for you. Staying out of debt is the norm. Packing lunch to work is exciting. You are doing this because you want a more secure future and are willing to make some sacrifices today.

The overall strategy involves playing a good offensive on the income side and a tight defensive on the expenses side. This widens the gap between your income and expenses. This gap is your opportunity or capital which you now allocate to the right investments. If you do this over and over again the gap widens farther and at some point the gap is wide enough to sustain you without much effort on your part.