Old wisdom, new goals

I have began reading all kinds of books on finance and investing in an effort to educate myself about how money works and how are economy works. I am currently reading a book called The Only Investment Guide You'll Ever Need by Andrew Tobias. He gives a lot of information on things. Different chapters talking about different ways to save money or invest money. So far the most profound word of wisdom is also one of the oldest. I had always hear people quote "A penny saved is a penny earned." It was not until hearing an explanation of that statement in this book that it really hit home for me.

The example goes something like this. We will use easy figures just to make it easy to follow. Let's say you work and earn $100 before taxes. Then let's imagine that you only have to pay a 10% tax (without any deductions). So for the work you did you actually only earned $90 dollars when all is said and done. However, if you manage to save $100 dollars, then you have earned $100 tax free. That seems simple but I don't think we think about it. The book also talked about how Americans used to save 10% on average in the 70's were as 30 years later the were saving as little as 2%. That increased slightly during the Recession in 2008.

This information and common sense wisdom is something I want to try to adopt and apply more intentionally in my life. The blog that I am reading about this, Millennium Money, recommends trying to get the point where you are saving 20% or your after tax income. My first goal is to try to save up an "emergency" fund. I am trying to get to the 20% mark so that this account will grow faster and I can start investing beyond just a savings account. Trying to cut your spending by 20% is not an easy chore but that is my goal. Both the blog that I am reading about money as well as everything I know about changing and maintaining positive behaviors is that it has to be constant and gradual. I am hoping that my gradual and initially small changes will begin to add up over time.

Wish me luck!