Think you already know how to save money? Are you doing everything you can to maximize your savings? Are you paying yourself first or last?
Like everyone else, you probably think you already know everything you need to know about saving money. After all, it’s a very simple concept, not exactly rocket science, right?
Ask yourself these two questions:
- Am I doing everything I can to maximize my savings?
- Am Imyself payingfirst?
If you answered ‘yes’ to both questions, congratulations! You know how to save money and you are probably on the right track to reach your savings goal(s).
If you answered ‘no’ to any of the questions, don’t worry! I can show you how to save automatically money and get as much of your savings as possible – it’s that simple!
No one can dispute the Importance of Saving MoneyWe all start out with the intention of saving money.
Somehow, life always seems to get in the way, it has a funny way of swallowing all the money you saved to save.
It’s the same old story repeated over and over. You promise yourself that next month will be different and that you will put some money in your savings no matter what.
But another month goes by, things happen and once again you end up saving 0.
Learn to Pay Yourself First
Are your taxes always paid on time? Of course they are! Because?
Because they are removed automatically.
As the money is automatically deducted from your payment or bank account, you never get in touch with it and therefore cannot spend it on anything else.
The government never misses a payment and you don’t end up with a tax debt at tax time. There is a lesson to be learned here.
Understanding the government’s game, you also can sand pay first, making your automatic savings plan.
I don’t just mean remembering to put money in the bank as soon as you get paid.
That’s just doing what you’ve always done – we both know it just doesn’t work.
Set up an automatic deduction like the government does and you’ll never lose a deposit in your savings account.
Talk to your employer’s payroller only after you:
- Determine how much you can commit to your savings each pay period
- Set your savings goal(s)long-term and short-term
Step 1: Find out how much money you can save
As a general rule of thumb, you should strive to save at least 10% of your net income. If you can’t save 10%, don’t worry.
The important thing is to save something, anything, however small the amount. Because? Because you will have already laid the groundwork for saving more money in the future when your circumstances improve.
Plus, you’ll already know how to save and will be used to paying yourself first.
TIP: Making your savings automatic means that increasing the amount of money you deposit will require little or no effort on your part as the system is already in place.
Consider budgeting to get a clearer picture of your finances and determine how much you can save.
A good budget can also help you free up even more money to save by reducing your variable expensesand preventing you from overspending.
Step 2: Set a realistic savings
target Having a savings target is important. Set your goal by asking yourself what do you want to save money on?
Maybe you want to save enough money to buy a new car or down payment on a house. What if you’re saving money for college or you’ve started thinking about saving money for retirement.
Whatever goal you set for yourself, it must be something important or very important to you. Your goal should also be as specific as possible, with exact dates and dollar amounts.
Visualizing your goal will help you stay focused on the task of saving money. Plus, you won’t mind making short-term sacrifices to save money, because the long-term payoff will easily trump everything else.
TIP: Don’t let yourself be disappointed by setting unrealistic goals for yourself. Take special care in setting a goal that is achievable within a reasonable time frame.
Step 3: Set up accounts for your deposits
In this step, you will need to settle details like how much money goes where.
For example, if your savings goal is to accumulate your emergency fund, you should put it in a high-interest (short-term) savings account because it would have to be liquid or accessible in an emergency.
On the other hand, if your goal is to fund your child’s college education, you should put them in an RESP (long-term) account. Your savings goal will dictate the types of accounts you choose to deposit your money into.
TIP: Consult your bank or investment advisor about the account or investment best suited to your savings goal.
Step 4: Make it automatic
At this point, you should:
- Know exactly how much money you have to work with
- Keep one or more savings goals in mind
- Have the right accounts set up and in place for your deposits
With that in mind, it’s time to make it happen. It’s time to automate your savings! Making it automatic is a 3-step process:
- First, you’ll need to prioritize your goals.
- Then you will need to figure out how much money to put into each goal.
- Finally, you will need to work with your company’s payroll and your banker to set up automatic deductions from your payroll or bank account for any savings account or investment vehicle you have, whether through your workplace or on their own.
TIP: For long-term savings goals like retirement savings, take advantage of the contribution matching programs your company offers. It’s FREE money!
Now for the best part – sit back and watch your savings soar! Here’s how to save money automatically and flawlessly.
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