"I did not just enough money to save each month. "
If I had a dollar for every time someone lamented how he or she could not save money, so I would never need save money on my salary.
Unfortunately, this means all-too-common complaint the complainer has neglected the most important piece of personal finance advice :. paying yourself first
Saving should not be an afterthought, once the bills were paid, groceries are in the fridge and rent is covered.
Instead, the record should come first. And yes, it is actually possible. Tweet this
Step 1: Run the numbers
In order to pay you first, you need to make the often dreaded task of budgeting. Tweet this
This does not mean that you must have detailed spreadsheets and annotated notes of every purchase you make -. But it helps
Instead, write down all your important expenses in a month: rent, food, cell phone bill, utilities, transportation costs, loan payments, etc.
Throw in a buffer of 10 percent to be sure. Then subtract this number from your monthly income
For example: .. Leslie earns $ 2,500 per month (after tax and 401 (k) contributions)
projects Leslie law and living expenses cost him $ 1.550 per month. It adds an extra $ 250 for expenses buffer, just in case. Leslie subtract living expenses and bills of monthly income. $ 2,500 - $ 1.800 = $ 700
Step # 2: Set an amount to save each month
Continue using Leslie as an example, she 700 left after paying all its bills and transportation costs and the purchase of $ groceries.
Leslie decides to give $ 100 per week to spend on shopping, entertainment or odds-and-ends she may need to purchase. That leaves him with $ 300 a month in "room for maneuver".
Instead of letting the money in his bank account, Leslie made a plan to automatically move $ 300 per month in savings once it is paid.
Leslie is paid twice a month, it will contribute $ 150 each paycheck into a savings account
Step # 3 :. Set up a savings account with a decent interest rate
vouchers accounts are not the appropriate place to save money. Why? Because interest rates on most checking accounts will earn a penny a year.
Even savings accounts at many traditional banks are quite dull. Instead of merely an interest rate of 0.01%, make sure to look around for savings accounts with the highest interest rates.
Internet-only banks like Ally, Barclays, GE Capital Bank and Bank Synchrony + Optimizer offers rate of 0.0% or more
This may seem insignificant, but $ 4000 economies, it is the difference between 40 cents and $ 38 in interest per year
step 4: Automate savings ..
If you can not trust you to you pay first, then it is best to automate savings. Tweet this
This way, the money coming into your account just money for paying bills and expenses. You will not have to worry about the temptation to spend money you should save.
Paychecks paid by direct deposit can be easily divided to send a percentage into a savings account.
Speak to your employer to defer an amount of each paycheck into a savings account.
Or you can automate the operation of your bank. Just be sure you do not accidentally end up in a situation discovered, since it automates to save money that are not in your account yet
Step # 5 :. Adjust the way you record
everyone can be like Leslie and save $ 300 per month. In fact, you can run your numbers and realize that you can not afford to save $ 2 on each paycheck.
Do not be discouraged.
The important part of paying yourself first is actually taking action. Tweet this
It is much easier to build the habit of saving early instead of taking the habit of spending all your money and try to recalibrate later life.
If all you can afford for the first year is $ 2 per month and still diligently save those $ 2 per month.
many online savings accounts do not have a minimum requirement to create an account so you can realistically save $ 2 per month without penalties not sufficient funds.
As your income increases (or decreases debt), then adjust how you see the savings.
aim to save at least 15%.
ultimately, everyone should aim to save about 15% of their salary after their contribution to a retirement fund.
This money can be used to build both an emergency fund and saving for large purchases down the road.
the journey to become a saver can be difficult at first, but the experience of an unexpected expense, without savings will be even more painful.
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