For those living paycheck to paycheck it is very hard to even think about actively putting money towards savings every month. I have been there. I have read so many articles saying that that I need to save 50 percent of my income and all sorts of other methods that just weren’t for me. This is the best way I have found to start saving money.
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Finally I convinced myself that if I was truly going to start saving money I needed to literally hide the money from myself. After setting a strict budget for the next month I went to a new bank and opened a checking account. To top it off I made sure not to get a debit card for the account in order to further limit my temptation to withdraw money.
Setting up Automatic Deposits
The next step was to go to the person in charge of payroll at my office to ask them to divert $250 from each of my paychecks to go straight into the newly opened account. It took less than 5 minutes and everything was in place. Just by doing this I went from only saving money with a 401k to saving $500 a month or $6000 a year!
As a perk for setting up the account to receive direct deposits they gave me a $300 bonus!
To be honest adjusting to this took a few months. There were times where I almost rationalized making a purchase because I had money in this account. But I kept my resolve and forced myself to leave this account untouched. Over time it has become just as easy to live without this money as it is to live without the money put into a 401k. It also offers a huge level of piece of mind knowing that if an emergency arises, I actually have money in the bank.
Future Goals for Saving Money
Since I have begun some new side ventures including the Counting Quarters blog I have expanded my goals to placing all of the profits from my side income into this account. This will benefit me in a few ways. One being that I have already proved that I can live comfortably on my existing salary. The other being that there will be taxes that have to be paid on this additional income and this way I can ensure the money is there to cover them. There is only a small amount of cost in operational expenses for running a blog, therefore much of the money can be saved.
After reaching my savings goal for my emergency fund I plan on taking the additional savings and using it to explore some new investment opportunities. I already have an existing Roth IRA that some of this money will go towards. Beyond that the rest will be diversified between index funds and stocks. Who knows, I have already had some success in real estate, so I may try to expand on it.
I know this method may not work for everyone and I would love to hear about what worked for you. Check up my follow ups on this topic to see how it evolves.
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