Saving money can be hard to do after taking care of bills, groceries, and general living expenses. This is even harder when your idea of saving money is by counting what’s left over in your checking account after paying those monthly expenses. It’s likely you will probably just spend what’s left on a treat for yourself the next month.
While this saving method might work for the rare individual, for most of us we really don’t think about our spending as long as our account stays above a certain number we’ve arbitrarily designated.
The easiest way to create savings and counter our instinct to spend without worry? Save your money automatically.
Saving your money automatically, or as some call it “Pay Yourself First”, is a way to siphon off part of your paycheck every time you’re paid and put it into a savings account before you do anything else. The concept is simple and doing it is quite simple too depending on if you are paid via direct deposit or paycheck. Note: Both of these methods require opening a second bank account if you don’t already have one!
- Direct Deposit: Let whoever is in charge of your payroll know you want to add an account for direct deposit. You will need your savings account’s routing number and account number to do this.
- Paycheck: When you go to deposit your check, you will have to let the bank teller know you would like to deposit some into your savings and the rest into checking. It may not be “saving automatically” this way, but it’ll work better than the old method.
Now that you have started saving you’ll soon join the less-than-50% of Americans who can survive for more than one month off their savings. The key to this is not only putting money into savings, but not pulling it out right away. A savings account does no good if you can use an app on your phone and be 3 clicks away from having it right back in your checking account.
Don’t make it easy to steal from your savings!
If your savings are just a few clicks on an app from being transferred and spent, consider either making it more difficult to access or making yourself wait three days between any plan to withdraw and actually doing it. This should help limit knee-jerk reactions to withdraw and give you time to properly plan how to use your funds.
While saving money isn’t the most intrinsically rewarding thing you can do, you’ll be glad one day that you put away a small portion of your pay rather than making a couple of extra fast food runs a week.