What is the EASIEST way to save money? Forget about it. Seriously. Just make your saving automatic first.
Three things to put on automatic withdrawal to make saving easier:
I like to think of this as paying yourself first. Decide on a dollar amount of each paycheck you can afford that can go into a savings account as soon as you earn it. This way, you won’t consider yourself having those funds so you can waste it on unnecessary purchases like your fifth pair of black leggings or your fourth shot at the bar.
- Paying off credit card debt should be your first priority for that extra money
- If you’re in the process of building an emergency fund (about 3 months income) – put your money here.
- If your emergency fund is solid, put the money in an accessible online savings account where you earn a higher interest rate (I personally have my savings in an ALLY checking account). If you can be accepted by a Credit Union, these banks provide the highest interest rates. Check out CULookup.com to see which ones will take you.
How it’s done:
Through your bank: Open a second bank account for savings with a bank like BB&T (even if it is not the same bank) that is separate from your checking. After every paycheck or once every month, schedule a certain amount of money to be automatically taken from your checking account and placed in your savings account.
Through direct deposit: If your employer uses direct deposit, you might ask your human resources or payroll department if you can set up a direct deposit for two accounts. You can then automatically have your savings deposited into your savings account and the remainder into your checking account.
Automatic Bill Pay
I personally have every single one of my reoccurring bills set on automatic bill pay. I check them over to ensure nothing is out of the ordinary, but the money comes out of my account so I don’t ever have to worry about missing a payment and paying interest or having my credit hurt.
- I would suggest linking your bills online to your credit card, especially if you’re using a great rewards card. Not only are you earning points, but if there is ever anything fishy with your bill you can easily dispute it.
- If you would prefer to not use your card, you can also use your banks online billpay option, so the money comes directly out of your bank account and you can see all your bill payments in one place
- You always have the option to set up direct payments with the company as well, but if you ever have to change out your credit card, you have to remember to change it on every different carriers website, which could be a pain.
Set up your electric, cable, cell phone, health insurance, credit card to all be automatic…. just make sure there is always enough money in your accounts to pay them, and you’re good to go.
Especially for people in their 20’s, it’s important to start investing in your retirement, even if it’s just a small monthly amount. Either select a sum you’re comfortable with each month (for example, $100), or pick a target percentage of your annual earnings (say 5% or 10%). If that sounds like too much, pick a lower amount and commit to increasing it over time or each time you get a raise.
* Have your contributions automatically deducted from your paycheck, and take part in your employers matching contributions of what you’re saving for your 401(k) if that is offered.
* Bonus is this lowers your taxable income. Typically, contributions are taken from your paycheck before taxes—so you pay less in taxes by deferring them until you withdraw the money in retirement.
*These plans also allow for tax-deferred earnings growth so you don’t pay current taxes on any dividends and interest earned until the funds are withdrawn, typically in retirement. This can also help your overall savings to grow faster than a comparable, taxable savings or investment account.
If you don’t have access to a plan at work or would like to contribute something in addition to your employer’s plan, an Individual Retirement Account (IRA) is another great option. Learn the differences here. Either way, have the set amount that you would like to save automatically withdrawn and put into your retirement account so that you can start saving up for that dope gold plated wheelchair so you can be the coolest senior citizen ever.