Growing Your Money
You made a wise decision choosing to save some of your money. You’ve determined how much money to save from each paycheck using the 50/30/20 rule Those are big steps, but now, what do you do?
Have you ever heard the phrase “Pay yourself first.”? When you make saving a priority, you are paying yourself first. Each time you get paid, take 20% and immediately put that money into your savings account.
If your employer participates in direct deposit to multiple accounts, you can choose to automatically deposit 20% of your paycheck directly to your savings account. This action will save you from needing to remember to transfer the money manually, and with direct deposits, the money goes directly into your savings account. Sometimes it can be a bit more emotionally challenging for you to transfer the money after it is in your checking account. It’s easy to come up with reasons to justify leaving the money in your checking account.
If the money is kept in your checking account, you are more likely to spend that money. The “out of sight, out of mind” concept applies here.
We are all guilty at one time or another of spending money we intended to go into our savings account.
You are in control of how to allocate your savings. Personal goals will help you make a better decision. The critical element is that you ARE saving! With the 50/30/20 rule, the general recommendation is to allocate 10% for your emergency savings fund, and that will leave 10% to allocate for future expenses such as retirement, vacations, and big purchases.