In the Automatic Millionaire (by now, you must think I’m in love with David Bach since I mention him non-stop) he talks about making it automatic. You pay your cell phone bill, your rent, your utilities, and then you have some money left over. You spend like usual, and at the end of the month, you have $25 to spare, so you put it away in savings. The next month- same thing, you have $15 to spare, so you put it away in savings.
I used to roll like this and it didn’t work.
I would dip into my savings and take some money out for my trips, and at the end of the day, couldn’t really say how much I was putting away per month. I THOUGHT I had a budget I stuck to…I had AIMED to put away X amount of dollars per month, but looking back at my transactions, this didn’t really happen all the time. I had made excuses like “oh, I just need only a few hundred here, I’ll return that amount next month”. It didn’t happen. It is human nature not to have much will power! The more you tempt yourself to stay away from something, the more you gravitate towards it and succumb to it. Kind of like that chocolate bar that you told yourself you wouldn’t have and ended up eating two..or three. Or that bad-ass boyfriend who treated you poorly, wasn’t returning your calls or texts and you tell yourself you won’t text him again for fear of coming off as a loser-stalker but you did anyway… and came off as a loser-stalker (said scenario isn’t from personal experience, yeahhhhh……..).
Anyways, so why fight it? Since then, I have made it automatic. And it’s really working. I transfer X amount of dollars from my chequing account into my High Interest Savings Account. I haven’t actually set up “pre-authorized deductions” biweekly because I am the type of person who needs to keep some sort of control (in case I need to keep some money in my chequing account, you know). Soooo to fix this problem, I set up “future transactions” and set them up on the day I get paid. I can always change the date or the dollar amount to be transferred. I set up future transactions for about 2-3 months, then repeat.
I would say this is the hands down EASIEST thing you can do to take control of your finances. So start off with $50 a month automatically and work your way up to 10-30% of your gross biweekly paycheck. A budget planner to keep track of where your money’s at (credit accounts, debit accounts, bill payments) doesn’t hurt either- and it’s easy to stick to, if it’s automatic too.
Do you make it automatic? Are you a big fan of automatic savings as much as I am? Please share!