How to make a habit out of saving
If saving money was easy, we wouldn’t have 68% of Americans living paycheck to paycheck.
Listen the truth is that yes the cost of living is high and wages seem to not be enough for the life that we want to live. Maybe you are decent at putting money in your bank account but before you know it, you are dipping your little fingers right into that savings account. Poof! There went your savings…
We know that we should have at least 3 months worth of expenses in our “emergency fund.” We know this, so why is it so hard for people to actually do it???
Here’s the thing, most people aren’t going to put money away if they have to physically transfer it from a checking to a savings account. It rarely happens. We can attempt to do it and it might work for a month or two and then we “fall off the bandwagon” and we lose faith in ourselves. Am I right?
This is what you need to do if you want to get serious about saving some money and crush your goals:
Follow these easy steps:
1.Figure out what you are saving for. What is your goal for that money??
Example: college, a wedding, a baby, a new home, down payment, whatever it is!!!
2. Attach an actual dollar amount to that goal. You must be as exact as possible.
Don’t just say you "think" you need $5k, $30k etc. Do your homework and figure out an exact dollar amount. Is it $1,275?? Is it $32,500?
3. Create a timeline for when you need the money. Divide the dollar amount from step 3 by the number of paychecks within your timeline.
If you get paid every other week and you need $3,000 in 6 months then you would have to save $250 per check. If you need $1250 in 6 months then you just need to save $104 per check.
*if you realize that you can’t save that much every paycheck then you will have to make an adjustment to your dollar amount or your timeline but never to your actual goal.
4. Set up a separate bank account. Ideally at a different bank than your primary checking account. Name this account whatever your goal is!! This will help you stay on track.
This is KEY because you will have to do quite a bit to get $50 bucks transferred into your checking. The whole point is that you are not to touch this account.
*make sure you don’t get chargers on that extra account.
5. Set up a 2nd direct deposit at work. Whether that’s done online or just going into your HR office.
Don’t be discouraged if your job doesn’t offer this. Simply set up a “bill pay” and PAY YOURSELF the same day that your direct deposit comes in.
6. Watch the balance grown.
DON’T TOUCH THIS ACCOUNT UNTIL YOU REACH YOUR GOAL!
I hope this helps you stay encouraged, motivated and on track!!! You totally got this :)
Pamela Rodriguez CFP