This is the first post in my new Pillars of Personal Finance series.

• Saving – The Bank of You
• Investing – Grow Your Wealth
• Debt – World’s Biggest Product
• Income – Your Personal Economy
• Planning – Goals, Budget & More

Saving is Everything

There is a colossal reason we started with Saving in this series, because saving is the foundation for everything else in Personal Finance. No matter what else you accomplish with your education, career, income, debt or planning, if you fail to save your income, it will be very difficult to accumulate wealth. Sure, you may buy a house, cars and plenty of expensive stuff, but you will never have the freedom that comes from a well-invested nest egg.  More important, you will be giving away all of your  income to others, without keeping any for yourself and your family. On top of that, you’ll lose all of the potential future income from your savings and that could be a huge amount of money.

The Bank of You

The biggest reason I started this blog way back in 2007 was to encourage people to save and invest their income. Being your own bank is the exact opposite of being in debt.  Instead of borrowing and paying interest, you are accumulating money from every paycheck, investing it and receiving the returns from your investments.  Soon, this can grow to a significant amount of money to fuel your dreams and secure your future.

One of my very first blog posts, Pay Yourself First, explains how to become your own bank.  Paying Yourself First is a concept I learned from the book, The Richest Man in Babylon. It is also covered in many other great books such as, The Automatic Millionaire. It’s simple, yet highly effective.  It’s the surest way I know to prosper.

The keys to success are:

• Save a minimum percentage of everything you earn.
• Save first, before you spend any money.
• Increase your savings as your income allows.
• Automate your saving, whenever possible.
• Start Saving NOW.  Don’t wait for any reason.

I recommend saving at least 10% of your net pay and more if you can afford it.  The ideal time to begin saving is from your very first paycheck.  If you haven’t started saving yet, start saving on your very next paycheck.

The Bottom Line

Saving and compounding are purely magical.  The sooner you start and more you save, the better off you’ll be.  The longer you wait and more you fritter away, the more money you’ll lose in your lifetime.

“The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought and so broadens the mind.”

– T. T. Munger