Step 06: Save 3 – 6 Months Salary

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My whole aim or reason for this site comes down to mainly trying to increase your financial intelligence and awareness by sharing ideas, tips, tricks and experiences so that you may use them into your own life and bring about your own financial freedom.  BUT, what is financial freedom?  I have decided to give it my own meaning:  it is the ability to do or purchase whatever you want and at any given time you want and not be limited by the cost.  This definition is not the gospel, itself is a bit unreal, coz i would like a jet but damn it, i cannot afford it.  So what do i mean?  Well, i’m referring to wanting smaller things, one step at a time.

Then, the whole point of being financially intelligent is to enable you to start planning your finances and start saving money and using it wisely.  Extremely important is the start saving money part.  The initial goal is to save between 3 – 6 months of your salary.  Notice that i don’t mention weather gross or after tax salary.  That i have left for you to individually set your own goal.  Why 3 – 6 months salary.  Well, the experts have said that in the event that you are fired or retrenched then you can at least still survive for that period while looking for another job and hopefully get another job before you run out of funds.  But i’m not looking to be fired or retrenched anytime soon, but then again you never know.  That reason was good enough for me, and hence the saving journey began and so should yours.

My very first milestone was obviously saving R1000.  Small as the amount sounds, Rome was never built in one day.  Next milestone was R5000.  Took a while but imagine the satisfaction i got when i check my savings account and see that i have reached another milestone.  Next came R10 000.  Bigger smile, greater feeling of accomplishment and better yet, a definite bounce in my step when walking into a restaurant for lunch while knowing that i have some 10k in my savings account and im not even gonna touch it coz my budget allows for a few restaurant lunches/dinner from my main account.  Now, ain’t that financial freedom?  It definitely is i tell you!

Next milestone? 50k!  Now i can only imagine how it would feel.  50k in the bank!  Money in the bank!  Wouldn’t you like that?  Rather wouldn’t you want that?  I would, definitely!

So where or which account should you park your gradually increasing money in the bank?  Definitely not your main transaction account.  In the early stages, your second account, the transmission/savings account should be just fine.  Check Step 05:  Open a Transmission/Savings Account. (click link) As the amount starts getting larger, how about you open a Notice Select Account for it.  Also check out :  Open a Notice Select Account  [TIPS & TRICKS].  Or place it into you access bond facility account.  There are a couple of options you could look into with regards to your 3 – 6 months salary saving goal.

Save 3 – 6 months salary

So you have successfully managed to achieve your 3 – 6 months salary saving goal.  What happens next?  Do you stop or continue?  3 – 6 months was just a suggestion to encourage you to start saving by first giving an achievable or reachable goal.  Now that you have reached your goal, the possibilities are just beginning.  Sit down and realign and readjust your goals again.  I’m a firm believer in readjustment and realignment.  100k?  200k?  Go for it.  The thing is when you start getting to those amounts i.e 100k, you also start looking at other methods or plans to save or make your money work for you.  You also start spending more time on your financial planning – and this is the very essence of what i would like to encourage you to do – spend a little more time on your financial planning and management.

As a last word on this step, i would like to caution you against quick get rich schemes.  Remember, if it sounds too good to be true, it probably is a scheme.  Don’t let your greed overcloud your judgement.  But if your greed does overcloud your judgement, let the amounts at risk be a losable amount and not your whole life savings.  Loosable as in, it will not be the end of the world if you lost that amount.  Then again it’s been said that the higher the risk, the high the returns.  The call is on you.  Play safe, play smart.

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