It’s not always easy to put a little money aside for a rainy day. You may have good intentions, but at the end of the day, there’s just no money left. Somehow, everything you earn is spent before you get your next paycheck.
Start by creating a personal budget. Look at what you take in each month. Then write down your fixed expenses. These are things like rent, car expenses, utilities, etc. Think about how much you need each month for groceries and other essentials. This is your basic budget. It’s good to know what you need each month to make ends meet.
Next, it’s time to do a little math. Start with what you take in each month and subtract all your major expenses. What’s left is your discretionary income. This will allow you to afford entertainment, clothing, nail care, etc. And from now on, some of your discretionary income will go into a savings account.
Pick a number that you’re comfortable with. Maybe it’s just $20 per month, maybe it’s $500. Include that amount in your budget and treat it like any other bill. It won’t take long for you to get in the habit of setting that money aside to save.
If you want to make it even easier, talk to your bank about setting up a separate savings account. Then, set up an automatic deposit to transfer the savings to the new account as soon as your paycheck arrives each month. If you don’t see the check, you won’t miss it and your savings will run on autopilot.
Don’t forget to review your savings from time to time. Take another look at your budget. Can you increase your savings a little more? Another great way to boost your savings account is to put extra money – such as birthday money, tax refunds, bonuses, etc. – directly into the savings account. Again, you won’t even miss the money, but it will help you build up your savings quickly.
Make sure your savings are in an interest-bearing account. Since you won’t touch the money unless it’s an extreme emergency, you should be able to earn at least a small amount of interest. Talk to your bank advisor about the best options and put your savings on autopilot.
One last tip: Talk to your employer about the possibility of contributing to the 401K fund. You may be able to get a contribution to your retirement account from your company.
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