AllHipHop.com’s resident Daily Word guru and all-around inspirational guy, Ash Cash, is back with his latest installment of “Ask Ash Cash.”
Greetings and Salutations, my Great People!! Welcome to another addition of Ask Ash Cash, where we go in the streets and answer all of your finance and business questions. Remember you can send your video questions to Questions@AskAshCash.com or via Twitter (@IamAshCash - use #AskAshCash).
Today's questions come from musician Brian Melo and his wife. The first question is "why should you save money?" and secondly, "how can you save money?"
The answer to "Why should you save money?" is very simple... Think about the future! Those who fail to plan also plan to fail. Saving money is important so that you can be prepared for any of the emergencies and obstacles that life may throw in your way. It is also important to save because, at some point after working so hard, you are going to have to retire. You want to make sure that when you retire, you have money saved so that you can continue to live the lifestyle you want to live. Lastly, you want to have money available to make some of the big purchases, like a down payment on a house or buying a car, etc.
To the question of "How to save money," I say treat yourself like the IRS. When you work a 9-5, the IRS automatically takes whatever your tax rate is out of your paycheck before you see it. You have to treat yourself this way, so every time you get paid, make sure you put aside 10% of your money into an account. The best and most effective way to develop this habit is to make it as painless as possible. There is a saying - “out of sight, out of mind” - if you make it automatic and make it invisible, you will create the habit without it even disrupting your day to day life.
If you receive money via direct deposit, take out your savings before you receive it - you’ll never know it’s missing. If you receive income in the form of a check, then have automatic deductions come out of your bank account on a monthly basis.
In order to avoid the temptation of using the funds for everyday purchases, you should open a separate bank account at an institution other than the one you keep your primary account in. I suggest a high interest savings account at a bank like ING Direct or FNBO Direct. Because these banks have little or no physical branches, it limits the access to your account, making it easier for you to save, while receiving a reasonable interest rate.
Ash’Cash is a Business Consultant, Motivational Speaker, Financial Expert and the author of Mind Right, Money Right: 10 Laws of Financial Freedom. For more information, please visit his website, www.IamAshCash.com.