Trying to make it to the end of the month without draining your bank account is a constant struggle for some twenty-somethings. We have bills to pay, debt payments to make, and we want to be able to go out for a drink with friends after work on Friday. How on earth can you except twenty-somethings to save on top of our long list of financial obligations when we are barely making enough money each month to pay the bills?
Making savings automatic is an easy way to learn to live on less money and it goes hand in hand with paying-yourself-first. This is perhaps the easiest and most painless way to save money each month. Setting up your bank to withdraw a specific amount after each paycheck allows you to save without ever having to think about it. Before you know it you will have hundreds or even thousands of dollars tucked away to boost your emergency fund or pay for that exotic vacation you have been dreaming of.
One thing to note when it comes to making your savings automatic is to ensure you set up the withdrawals a day or two after you are paid. We’re stressing this because generally when you wait till the end of the month and you’ve paid all your bills there isn’t very much to tuck away. Our brains see that there is money in our account and our first reaction is to spend it. By having automatic withdrawals only a few days after you are paid you never see the money and you don’t register that it’s there. You inadvertently learn to live on less while putting money away for your future! See it really is a win-win!
If you automate your savings you will be shocked by how quickly your savings account grows. Set up a savings account in January for Christmas spending and deposit $50 a month. By December you will have $600 to spend on Christmas gifts. Not only will this allow you to get through the holiday season stress-free, you won’t have to carry a balance on your credit card to pay for all those gifts!
Setting up an automatic savings plan and ensuring you are paying yourself first is the best way to set yourself up for a successful financial future! Don’t you want to be rich? Paying yourself first is step number one!