Building Your Savings

Posted By: Dr. Frugal in Saving on 06/11/2007 at 10:46:55

Set up a separate account for your savings. If those funds mix around with your day-to-day funds, it's almost inevitable that you'll end up using some (or all) of the savings, and you might not ever repay it. There's also a mental piece: seeing your savings grow each month and hitting financial goals is very motivating.

If you have direct deposit at work and your employer allows you to split your deposit between several banks, consider having a set amount deducted from your paycheck each pay period and deposited in your savings account. It's much easier to save money that doesn't have to move out of checking before hitting its destination in savings. Out of sight, out of mind. If you don't have this option from your employer, just write yourself a check each month when you go to pay your bills. After a while you won't even miss the money that you're depositing into savings.

Use "found money" to pump your savings up instead of spending it right away. Found money can come in a lot of different forms: tax refunds, overtime, garage sales, bonuses at work, etc. This money is ripe for saving. Sure, you miss out on the joy of some trinket but your retirement in Maui thanks you.

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