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As an adult, we all know that we should be saving for retirement, especially if you live in America. But when you first enter the workforce, saving money can be difficult if you’re not used to it. It’s so easy to see that first big boy (or big girl) check and immediately assign all of it to some arbitrary sign of accomplishment. I know that when I got my first check, I’m pretty sure I blew it on some new gadget. That was back in 2015. Fast forward 3 years and that bad habit followed me, until now. I’m about to share with you the one financial tip that single-handedly saved my savings.
By now I bet you’re thinking that I’m going to just say something like “put a certain percentage of your check into a savings account” and you’d be mostly right. That’s the advice that most of us receive when we start working for corporate America. Most parents say 10-20% should go into a savings account. While that sounds good on paper, it’s not always practical. I have a truck note, rent, bills, and I’d like to have somewhat of a social life. It’s not like I’m making a boat load of money. I’m making just enough to pay my bills on time, eat a little something and get by so 10-20% just doesn’t cut it for me. Also, it’s hard to say goodbye to that much money every check, especially when I know it’s so easily accessible.
So here it is, the moment you’ve been reading for, the tip that saved my savings was to completely automate the process. I don’t mean direct deposit into a savings account, because I tried that too and it didn’t exactly work out either. What I mean is to set up a recurring transfer. Go into your account manually and set a specific number to be transferred into your savings account (or to a different bank account) each time you get paid. If you get paid bi-weekly, set it to happen bi-weekly. If you get paid monthly, do it monthly, and so on.
The reason for the manual setup is twofold. One, as someone who is just getting into this habit, there may be some need for a little flexibility in the beginning. If one pay cycle is a little tight, you know that you could dip into that savings temporarily. Or if you need to adjust the number of savings, you can do it yourself without having to contact HR or go through your job. The second is to help train yourself to save a certain amount. By setting up the number yourself, you will know that you are saving a specific amount of each check. Think of it as paying a bill every two weeks, except that bill is you.
Once you get into this habit, your savings account will slowly begin to rise, and it will feel like you didn’t have to do anything extra to get there. This set it and forget it method has worked wonders for my savings account, and I now feel like I’m on track to a successful savings habit.
There are two ways to figure out how much to transfer.
I hope you found this tip helpful. If you did or if you have a better tip, leave it in the comments below. I’d love to know what you guys think!