It is never easy to draw up a budget, much less adhere to one. And though merely spending less money might seem like a noble idea, it is possibly a lot more challenging than creating that hated spending budget. So, how do you ensure you have a neat little sum hidden away for that rainy day, and that too with out the involvement of the B-word?
Rule 1: Compensate yourself very first
It does not matter if you’re drawing a six figure income or surviving paycheck to paycheck, without exception take 10-20% off the top of every check and deposit it in a high yield personal savings account previous to paying anyone else – period. This might sound challenging, or even pointless, but is infinitely easier than trying to cut down on using the cash you know is near by. After all, what you don’t see, you can’t miss. Should you possess a checking account, you can register for the automatic savings programs offered through numerous banks like ING Direct, AmTrust Direct, and others to have money moved into your savings account each month. An automatic savings plan allows you to specify an amount you would like moved from your checking account into your web based savings account on a regular basis. Even if you put away $500 a month, you can have $6,000 before the year is out, not even including interest.
Rule 2: Lock your self out of your emergency/retirement fund
This basically follows the same principal as Rule 1. If it’s easy to access, you’re likely to get tempted to dip into it for situations that might not entirely deserve the title of an emergency. The smarter solution to do would be to generate a complex password, write it down, and pass the piece of paper to a trustworthy friend. Let them know they cannot bring it back to you until you have a REAL emergency: natural disaster, medical crisis, emergency car repair, surprise emergency insurance costs, or when you lose your job. And always, always keep in mind, that this out-of-reach account will help you to pay the bills during a crisis, without the risk of an over-drawn credit card, or it costing you much more in interest charges.
Rule 3: No credit. No credit cards. No loans. No purchasing on credit. Period. Period.
It is going to be pointless to have $1,000 in a savings account and $2,000 in debts. Remember that you will definitely spend a lot more interest for debt than you’ll earn interest on savings. Statistics also show that folks often buy unnecessary, and much more costly, items while using a credit or debit card. Specially using a credit card, most men and women have a tendency to forget that the amount they’re spending will really have to come out of their own pockets. On the other hand, there is somehow a reality check any time you’ve got to hand over cold dollar bills while making a product purchase. So, as much as possible, stick to cash expenditures.…