Do you have a goal with your money, but you aren’t sure how to get there? Want to learn how to painlessly save for your goals? Let’s say, for example, that you want to save 10% of your paycheck. You might have noticed that even if you plan to save 10%, somehow when you look at your bank account the 10% always seems to be missing. Let me tell you a mind trick for your money: sometimes you have to fool yourself to achieve your goals. So how can you painlessly save for your goals?
How can automation help you save for your goals?
Take advantage of automation. Open a bank account with no annual fees or minimum balance– check local credit unions or online banks such as Ally or Capital One. Then setup an automatic transfer to occur each pay date from your main bank account into your savings account. If you get paid the same amount each paycheck, it should be pretty easy to setup the automatic transfer. If your paychecks are not always the same you can either do 10% of the minimum amount you expect you’ll get paid or you can transfer the money once per month after you get paid.
How much can you save for your goals?
Not sure how much you want to set aside to save for your goals? List out the bills you pay each month, the amount you spend on food and spending and add it all together. Then take the amount of money you earn each month minus the total of your spending and bills. That amount is the maximum you can set aside for savings. You might want to leave yourself a little bit of a buffer, but overall I would recommend putting the majority of that money into your savings account. When the money is in your savings account, you’re financially prepared for life happening and something getting in the way of your financial plans, and you’ll have savings to fall back on.
The best part about having it setup to transfer automatically into a separate account is then you don’t have to think about saving, it just happens. That way you can painlessly save for your goals. You’ll get used to your paycheck being a little bit less, but when you can’t see the money in the account you monitor every day, you’ll be much less tempted to spend the money you have set aside for savings.
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