Are your savings enough to help you handle a financial emergency or manage your expenses in case you lose your job or live comfortably during the golden years of your life? Your savings determine the kind of choices you make later in life and how you end up living those golden years of your life.

David Laibson estimates that about 10% of Americans save too much, while perhaps 30% of us have a healthy savings habit. And the rest of us? “When there is money in the bank account, we go out and spend it”.

With some basic understanding of simple and compound interest, you can easily manage the way your money grows. Savings is a responsibility that you owe towards yourself and your family members. You might now end up asking yourself, “How can I save money when I can barely make ends meet?” Believe it or not, this is a common reaction many people have when they are first approached with the idea of planning for their financial future. At first, saving may seem like a daunting task, Remember, though, the journey of a thousand miles begins with a single step.

Saving money from a first job salary can be tough; however, the essential thing to understand is that the habit formed will help you in the later years of your life. Saving is the habit you must start with and stick to it for the rest of your life. By transferring a little money to your savings account with each pay check, you will accumulate an emergency fund off the bat. Setting a clear goal in mind will help you move smoothly through this saving journey. Are you putting away money for a rainy day, a new car or retirement? This helps you stay motivated and on track. Well, a good 10% savings for retirement will help you lead a comfortable life during old age.

Of course, you will be bothered about your kid’s education and settling him up in life. Colleen Schon, senior vice president of the Barrett Group of Raymond James & Associates suggests that parents in their mid 30s with two kids should put about a quarter of their savings in their retirement funds, about a quarter in 529 accounts and the rest in other savings, to cover home repairs, vacations and other needs. Get your kids into the habit of saving money. One good way is to make it a rule that one third of all income whether its allowance, earnings or gifts from grandparents goes immediately into savings.

Automated savings helps you ease out this process. Sit down in the beginning and determine how much you want to save each month. Once you have cut back on bills and expenses, have that money automatically deducted from your paycheck. Thus, you will end up saving a good amount of money without actually putting too much of your head into it.

You need to understand that the government or your company will not take care of you. Read, listen and learn about personal finance, investments and strategies. In the end, your financial well-being is in your hands, so make the best efforts. Saving not only fulfills your responsibility towards yourself and family, it helps build security and gives you the peace of mind.

written by REI Circle (www.reicircle.com)