Trick Yourself into Saving with These 3 Tips
Keep making payments on items you’ve paid off
Say you’ve endured five long years of making car payments and now you own your title free and clear. You already have that money factored into your budget so why stop making those payments even it’s not to your lien holder? Instead start setting aside the money you would have paid on your car and put it into a savings account.
Car payments are a good example because around the time you pay them off is about when you’ll likely need to start preparing for costly repairs. However this method will also work with mortgages, student loan repayments, or credit card debt payments. You can also go one step further and divvy up the extra money between a savings account and an IRA or other retirement account — just as long as you’re not putting the money right back into your checking account to be spent.
Make your saving automatic
“May you be in heaven a full half hour before the devil knows you’re dead.” Or, in this case, may your earnings be in savings before you ever know it’s spent. Setting up an automated savings plan is as easy as a visit to the bank or filling out a form with your payroll department at work.
There are several different ways you can allocate your savings automatically without realizing you’re doing it. If you have direct deposit many employers and payroll companies will allow you to put a percentage or a set dollar amount that you’d like to go into a savings account instead of your checking. Another way is to visit your bank and see what types of automated savings plans they offer. As a last resort you could also fill out a new W-4 to increase your tax withholdings, although this plan will just mean you’ll get all the money back with your tax refund when you might be tempted to spend it.
Investing without thought
Today there are a number of apps and websites that will allow you to make small investments easily and without having to think about it. One such app is called Acorns and basically invests your digital loose change. Acorns links to your credit or debit cards so that anytime you make a transaction it will round it off to the nearest dollar and deposits the difference in an investment account. While you may not start with much (although you can also schedule larger deposits to help boost your account) this can add up quickly. Plus, if you’re not already an avid investor, this could be a good way to get you started.
Saving money isn’t easy but tricking yourself could be. If you don’t see the money coming into your checking account chances are you won’t miss it as much. That’s why these three tips are perfect are building up savings painlessly.
Also published on Medium.