Hi guys, I'm no PF whiz - I'll admit that straight away. But I am working on it, and (I think) a very good saver, which I do by playing "games". My best friend was expressing her frustration with a stagnant savings, and I shared these tips with her. I thought I would share them here as well, partially to educate and partially to be educated.
I'm completely open to anyone contradicting or improving upon these suggestions, but I don't think they are a bad place to start - think of it as a "Couch to 5k".
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I keep two accounts, my checking is my spending money, and my savings is my "no money leaves this account over my dead body" account. The important thing for me is having an account that I've internalized cannot be withdrawn from.
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I do pull my bill money from the savings account, but that money is calculated and constant.
Here is my order of operations.
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I calculate each of my bills, and then round up to whatever I can comfortably do. If my internet bill is $39.99, I mark it as $50. I do this for all my bills - the rounding may be by $5 or $20, but it's just money to easily save right off the bat.
(Note: I do not factor in gas or food - these are just the staples; essentially things that will go into collections or shut something off if I neglect to pay; those expenses come from my checkings) -
Once I've calculated all my constant monthly expenses, I divide that number by how many paychecks I receive.
Example: My personal number is $900/month for rent/electricity/internet/student loans/etc. I don't have a car payment, but if I did it would also go in there. Remember that number is also the product of rounding each of those numbers at least slightly, so there is already savings happening. I get paid twice per month, so I know $450 per paycheck needs to go into that savings account.
I know, this is basic stuff...
- Then I round that number up, just more money to be saved. So instead of $450/paycheck, I make it an even $500. There's another $100/month being saved without even trying.
Here is where the "games" start.
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That money is what I have always available to pay all my bills. I'm saving, and all my staple expenses are accounted for. However, I try to pay as many bills as I can out of my checking, or "spending", account.
Example: $40 internet bill? I have enough in checking to pay that. I pay it from there. Now I just saved $50, instead of only the original $10 I rounded.
I do this for as many bills as I can, often it's all of them (sans rent and loan payments). -
I also use my bank's "Keep the Change" program. I think I've seen that program criticized here in the past, though I can't remember why. I find it leads to a chunk of change ending up in my savings without even thinking about it. I'm open to learning more about why it may be a less-than-wise decision though.
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When I get to my next paycheck, any money remaining in my checking immediately gets siphoned into my savings. So the less I spend, the more I get to save at the end. This way I start from scratch every month and don't build up my checkings...checkings is where I spend from, and seeing more money in there means spending more money.
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I like to do "challenge" paychecks. Instead of saving that $500, I'll immediately deposit $600 or even $700. This pushes my budget very very thin. But because I've made such a great habit of seeing money as never exiting savings, I genuinely see myself as a pauper and live accordingly. This is where I'm at right now - I saved an extra $185 and at 7 days out from payday...I'm feeling the effects lol.
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If I get worn out by my shoestring lifestyle, sometimes I'll allow myself an extra $50 or $100 per paycheck guilt free. It's worth it to feel a little more at ease grabbing a beer with a friend or a Starbucks, and keeps me from feeling too stressed out about how frugally I live the rest of the time.
I don't make very much money, but in the last year I took my savings from around $1.5k to just hitting $8k this week. For context, I'm a 24 year old who is about 1.5 years out of undergrad.
Additionally, I'm not very good at budgeting. I'm financially responsible and a decent saver, but I struggle with allocating specific funds to specific things. I absolute think that is the way to go, but here is an alternate method I use to keep tabs on the day-to-day. I wouldn't recommend it necessarily, but it's better than nothing.
- When taking the temperature of my checking ("spending") money - which includes my gas and food needs, I divide that by the number of days until payday. Then I challenge myself to spend less than that number each day. I find $15-$20/day is a range where I'm comfortable, and below that I get a little nervous and become a shut-in to avoid excess spending. I do my best to have as many "no spend" days as I can.
Remember though, this is also my gas and food. So one trip to the gas station may be $40, or two days' budget. I try to compensate the next day to reach equilibrium.
The biggest mistake my friend was making (IMO), was depositing her paycheck into savings and then pulling out money "as needed"..."as needed" to me is really subjective, and I think you can rationalize your way into any purchase if you try hard enough. For me, I find it much better to see my checking as finite - there is no "as needed" beyond what's available there. If I can't afford it from there, I don't need it.
Again, these are not "expert-level" tips or anything of the sort. I'm very open to elaborations, or learning even better ways of getting things done. I have, however, made great progress saving by using these methods - it ended up being approximately 30% of my take-home salary, which again, I don't make a lot so that was not an easy figure to hit.
Submitted January 04, 2017 at 02:23PM by GreenSeptember_ http://ift.tt/2iIUnHO
