Saving

Margin. The very word speaks strongly.

In writing, margin means “space.” Teachers tell us to leave margins and “don’t write in the margins.”

For any individual or organization to last, maintaining margin must be a priority. Here’s why – you will experience economic downturns. If financial margin has not been established, it can cause immediate financial issues and even jeopardize the solvency of the individual or organization.

There are two types of margin every person or organization should have in place.

1. Cash On Hand Savings (Financial Reserves)
   
2. Monthly Savings (Operational Margin)

1.  Cash On Hand Savings (Financial Reserves)

Having money in the bank allows you to focus on your mission instead of exhausting yourself by determining the steps necessary to keep the doors open and the lights on. Financial reserves also allow you to ponder future opportunities to expand or grow your business or investments. Cash on hand also allows you the opportunity to encounter surprise expenses without worrying about how you will pay for them. In short, cash on hand allows you to sleep a lot better at night!

GOAL: 3 months of operating expenses

2.  Monthly Savings (Operational Margin)

This type of margin is created by managing your costs such that you are able to add money to the bank account each and every month. This is what happens when you have a profitable organization or life. This type of margin allows you to know that current bills will be paid without having to erode financial reserves and to also fund future dreams!

GOAL: 15 to 20-percent profit margin

If I were to have a choice of one type of margin, I would choose #2 – Monthly Savings because I would be able to immediately begin funding #1 with the surplus profits!

Where are YOU personally when compared to this goals? Where is YOUR ORGANIZATION in relation to these goals?

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In my book, I Was Broke. Now I’m Not., I share three things every person should save for and HOW to achieve it. You can purchase HERE or acquire a Kindle Version HERE.

Here’s a savings tip that be a lot of fun and a serious challenge if taken seriously – Go on a spending fast and give or save the difference.

It’s a simple concept.  Stop spending money on a specific item for period of time, and deposit the money that would have been spent on that item into savings or give that money away.

Here are some examples:

• Stop buying soda (or pop or Coke or whatever you call it) and redirect the money to savings
• Refuse to purchase any new clothes for an entire year and redirect the money to savings
• Eliminate the daily $4 coffee drinks (gasp!) and redirect the money to savings
• Park the car and ride a bike to work for a month and redirect the money to savings

A young lady I met a year ago embarked on a journey just like this.  Her name is Sarah, and she resolved to “not buy anything new for 365 days.”  Her year-long quest began on March 21, 2011, and she is about to finish her journey. On March 21, I will be posting the blog post that I asked her to write.  You won’t want to miss it.

QUESTION:  What will you choose to go on a spending fast for?  What will you do with the money that would normally have been spent on that item?

I’ll reveal my spending fast goal next week.

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If you are looking to gain substantial margin in your budget, try this tip: Open up the pantry!

Seriously, you probably have a month’s worth of canned and dry goods in there.  Yes, you will have to purchase the perishables like milk, bread, and veggies, but you could probably get by on 30% or less of your typical monthly grocery spending this month!

Here are some tips to maximize the use of your pantry inventory:

1. Pull everything out and place on the dining room table
2. Put meals together based on this total overview of your inventory
3. Write down the meals on paper so you don’t forget the ideas you have

I love these types of meals!  Is there anything better than chicken chow mein?  Or spaghetti? Or sardines and saltines? Or made-from-scratch biscuits and gravy?

For many families, doing this for just one month will save $200 or more!

QUESTION:  Have you ever done anything like this? If so, what was the strangest meal you ever put together with the items you “discovered” in your pantry?

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