Anyone can make a budget. Just sit at your desk and make decisions on paper, just like a CEO. You tell yourself "yes, it does make perfect sense to limit coffee spending to $20 this month and no more. I need to build that emergency fund."
But as you know, your hardline CEO self is different from your easily tempted day-to-day self. You're always one caffeine craving and a debit card swipe away from undoing your best intentions, and before you know it, there’s nothing left to transfer to your savings account.
Next time pay day rolls around, start with a better handle on your discretionary wealth and use electronic financial tools to lock your top priorities in place, so you can get that latte without the guilt.
Automatically pay your bills
One smart way to plan your spending is to have separate checking accounts for different expenses. Use one for out-and-about purchases, such as lunch, groceries and gasoline. The other is solely for paying bills. Here, you’ll want to go to your bill pay function and schedule monthly payments for fixed-cost bills for things like cable, mobile phone, rent and your car loan. Financial management tools have gotten pretty sophisticated over the years. You can even set reminders and alerts for when those monthly bills are due and paid.
For one-time bills and variable expenses, like your electric bill, just schedule the payment the moment you open the bill (don’t set it down or close the email until you take this step). Each pay day, use the schedule to figure out what you’ll need to cover your bills until the next paycheck. Then, just transfer it and forget it!
Automatically pay yourself
How is your savings plan going? If it’s been neglected, it’s never too late to start again. Set up an automatic withdrawal so you accumulate savings without thinking about it. For easy tracking of savings goals, you can open individual accounts, so there’s one for your car’s down payment and another for holiday shopping, another for your emergency fund, and so on.
As with any savings plan, take a look at your budget. If you need to, start modestly and gradually increase. Start with $50 a month and see if you can build to setting aside 5 percent of your pre-tax earnings. (If your annual earnings are $50,000, 5 percent of that is $2,500 a year.)
Automate your retirement
Don’t lose any more time to put away money for your retirement. If your employer offers a 401K plan, take advantage, especially if there’s a match, and turn a percentage of your earnings into investments. If you need an easy start, divert 5 percent of your earnings and bump it up a percentage or two each year.
You can also set up an automatic investment savings on your own. Set up a Roth IRA account and divert a small percentage of your already-taxed earnings into stocks, bonds or mutual funds. Even if you are already saving with your employer, if you have enough room in your budget, remember that no one has ever regretted saving too much for retirement.
Automatic savings at Minnwest Bank
Ready to start saving big? We’re here to help, even if you’re starting small. With automatic savings at Minnwest Bank, you can transfer as little as $25 a month. With no minimum balances and no monthly service charges nibbling at your progress, all you have to do is set up your monthly transfer and watch your money grow. Just a simple and easy way to help you reach your goals. Contact us today.
