One of the largest issues I see during one-on-one financial coaching is the inability to save money. Saved money is essential to long-term sustainability. Saved money relieves stress and allows you to take a chance. Saved money allows life to happen (job loss, disability, pay cut, injury, etc.).
But you already knew that part. Yet, even though we KNOW how important it is to save money, most people fail to do so. So, I wanted this series to focus PROVEN and PRACTICAL techniques that have helped people save money.
If you have negative savings (no money plus overdrafted accounts and debt), the goal is to bring you to zero. If you are at zero, the goal is to get to at least $2,500. If you have been able to save a substantial amount of money, it is my hope that you will participate in the discussion and share your own tips that have worked well for you!
PART ONE Automatic Draft From Paycheck
Establish a savings account and have the money drafted from every single paycheck. Whether it’s $25 or $250 per pay period – just SAVE! You KNOW that the car is going to break down. You KNOW that the school is going to send home a surprise expense.
By establishing this draft, it allows the money to be “out-of-sight.” When money is out-of-sight, it can be out-of-mind. This allows the account to grow without being robbed.
Now, I personally had a problem with this when I did not have a monthly budget. I would ROB my own savings account about 2.1 microseconds after I was paid. My account did not start growing in a healthy manner until after Jenn and I developed a plan that we agreed on.
How about you? Is your paycheck set up for an automatic draft into your savings account?