Often, people fail to accumulate money for retirement because they fail to develop a plan for saving money. It is important to budget the money that comes into a household by deciding how much will be saved before the money is spent on the necessities of running the house. George Clason mentions this concept in his book, The Richest Man in Babylon.
People often say they do not have enough money to save because of all their expenses. However, a careful review of the budget will reveal items which can be eliminated. People who fail to save often spend money on the wrong things, overindulge, or just waste money on things that they do not need. These items include junk food, cigarettes, alcohol, dining out in restaurants, clothing, and other items. insurance premiums should be part of the budget.
If we make a conscious effort to save first, before we spend, we will see what on our list needs to be eliminated. When we see the money accumulating in our accounts, we will look forward to saving more money. The first goal should be
to accumulate an emergency fund in the event that the car breaks down or the kids need new clothing, or someone in the family needs a loan, for example. The emergency fund should not be touched unless there is an extreme emergency and it should be in a separate account.
After saving the emergency fund, people can begin a savings plan for a new house, a new car, retirement, or college funding, depending on age and needs.