What’s the Best Way to Start Saving? Make It Automatic.

Posted by Home Morgage | Personal Finance | Wednesday 29 July 2009 9:18 pm

There’s no question that these are trying times. With car payments, house payments, credit card debt, and the cost of daily life, saving for the future can feel like an impossible task, but by harnessing the power of small, each of us can achieve whatever we set our minds to, one baby step at a time. And, as we’ve discovered, one of the best ways to get started on saving is to make it automatic.

As personal finance blogger and author of I Will Teach You to Be Rich, Ramit Sethi once said, “Personal finance is not about willpower.” So, the ideal way to manage your finances is to set them up to grow effortlessly.

In other words, try putting your savings on autopilot. Instead of consciously trying to put aside a fixed amount of money into your savings and retirement accounts, make it automatic. When you calculate your monthly budget, act as though the amount of money that you will automatically deposit into those accounts is not a part of your income. Start with a small sum at first and week-by-week, gradually increase the amount you save by just $10. Without even noticing it, you will adjust to your new income level and smile every time you check your ever-growing savings accounts.

THE POWER OF SMALL philosophy is all about taking on the tough challenges one manageable step at a time and nowhere is this more important than when dealing with your long term financial goals. Saving $1 million for your retirement or setting aside enough money for a six month emergency fund can feel like an unattainable goal, but with the simple change of automating your investing strategy, you can slowly but surely meet it.

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