Putting a little money away for a rainy day isn’t always easy. You may have some good intentions, but there isn’t any money left at the end of the day. Somehow whatever you make is spent before you make it to the next paycheck. It’s not surprising that so many people are struggling to save money — savings is the most boring thing in the world.
Putting your savings on autopilot can solve all of these problems and more! You don’t have to think about saving up every month, but you will be surprised at how quickly your savings add up.
The good thing is that putting your savings on autopilot isn’t something you have to start doing when you make a lot of money. You can get started right now by following some straightforward steps.
Start by Making a Personal Budget
Take a look at what you bring in each month. Next, write down your fixed expenses. These are things like rent, car payments, utilities, etc. Figure out how much you need each month for groceries and other essentials. This is your bare-bones budget. It’s good to know what you need to get by each month.
Now that you have your minimum requirements, you can start looking at your “wants.” Things like cable, cell phone service, eating out, or shopping trips often get cut when people are trying to trim their budget.
Don’t be too hard on yourself, though! Some wants are necessities. Just trimming your budget won’t work if you don’t allow for things like Internet service, a gym membership, or subscriptions to magazines.
Next, It’s Time for a Little Bit of Math
Start with what you bring in each month and subtract your core expenses. What you’re left with is your discretional income. This will pay for entertainment, clothes, getting your nails done, etc. And from here on out, part of that discretional income will go into a savings account. Even if it’s just $5 or $10, you will start to see the money add up.
If your budget is tight, consider cutting back where possible. For example, instead of getting coffee each morning at work, bring in a thermos and brew it yourself before leaving home. You could also look for coupons online before you go shopping. Another option is to bring your lunch from home instead of going out every day.
Pick a Number You’re Comfortable with
Maybe that’s just $20 per month, and perhaps it’s $500. Put it in your budget and treat it like any other bill. It won’t take you long to get into the habit of setting aside that money for savings.
To make it even more hands-off, talk to your bank about setting up a separate savings account. Then set up an auto-deposit to have the savings transferred to the new account as soon as your paycheck comes in each month. If you don’t see it, you’ll never miss it, and your savings will run on autopilot.
Don’t Forget to Audit Your Savings from Time to Time
Take another look at your budget. Can you increase your savings a little more? Another great way to boost that savings account is to take any extra money — things like birthday cash, tax return, bonuses, etc. — and put them straight into the savings account. Again, you won’t even miss the money, but it will help you build up your savings quickly.
Make sure your savings are sitting in an interest-bearing account. Since you won’t be touching this money unless it’s a dire emergency, you should be able to earn at least a little interest. Talk to your banker about your best options and start putting your savings on autopilot.
In the beginning, this will be a lot of work. But, if you stick with it, it will become second nature after a month or so, and saving money won’t feel like such a chore anymore. What’s more, putting your savings on autopilot means you will set yourself up to live the kind of financial life that will make everyone jealous.
One last tip: Talk to your employer about matching 401K funds. You may be able to get a contribution from the company you work for towards your retirement savings account.