There are some people who are gifted with the ability to save money and there are some that are not. Unfortunately, most people are of the later type. Saving money is something that requires an inordinate amount of effort for most people and only with effort can they accumulate any substantial amount. If this profile fits you then the only way to save money is to use a system and discipline.

Saving money is one of the necessary requirements of building wealth. No matter how much you make, your income must exceed your expenses if you are ever to build wealth. The only way this figure can be adjusted is by increasing income or decreasing expenses. Therefore, if you are unable to save money now then you have no choice but to decrease expenses.

The most obvious question to ask yourself for every expense that you incur is the question, “Do you really need this right now at this point in time?” There are actually very few things that are necessary for our immediate existence. However, as human beings we have a way of rationalizing even the most obscure purchases for the sake of necessity. Break yourself of this habit. Realize exactly what things are needed and what things are not needed.

The next thing to do is to create and stick to your budget. A budget will allocate a certain amount to frivolous expenses (i.e. anything non-necessary) that should not be adjusted. Whatever amount you decide to allocate toward frivolous expenses stick to it. Whatever amount left over is devoted to your savings. It is this that you must continue to build to accumulate wealth.

A good rule of thumb is to take 10% off any income you receive and set that aside for savings. By this, I do mean to physically take it out. That means you actually cash the check and get the 10% in cash and then do something with it like put it into a savings account or an investment account or even a retirement account. Whatever the case, the bottom line is that the money is being placed somewhere that you can get to only with some difficulty. This will discourage you from using that money when you have the desire to make an impulse purchase.

Once this savings account has accumulated a sufficient amount, you should then take that money and purchase an investment with it such as a CD or a mutual fund. This is much more efficient than simply leaving it in a savings account where it will receive a minimal amount of interest. So in a nutshell the steps are as follows:

1. Take 10% off the top of your income.
2. Place that money in a savings account or something similar.
3. Let that money accumulate until it is a sufficient sum for purchasing a better investment such as a mutual fund or CD.
4. Repeat the process.

If you follow these steps month in and month out then you will begin to build a savings account that will make you more financially secure and much closer to your long-term financial goals.