Fact: most people budget backwards.
We use our paycheck to make everybody else richer, then wonder what happened to our once sizable salary.
My latest post over at InvestmentZen covers how to flip that backwards budget right side up.
I share the best saving’s hack to short circuit your brain’s flaws, plus specific strategies you can use to create an automatic wealth building machine.
Check it out over at InvestmentZen.com:
How to Manage Your Money by Automating Your Finances
Enjoy!
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Awesome guest post!
Thanks!
This is a great post! One bit I might add to the bill pay section is the importance of automating student loan payments. Not only do you qualify for an interest rate reduction, but you also enjoy the same benefits (in reverse) that you do when you automate savings. You fix it, forget it, then open it up to find that your student loan is falling rapidly. I automate a monthly payment above the minimum and then my husband chips in extra payments when he has a big paycheck. By using this two-tier strategy we are nearing the end of a $62k student loan repayment journey that began in 2012.
Great point, thanks for sharing. And congrats on crushing those loans!
Along with the automatic 401k deposit, most employers will let you set your paycheck to direct deposit into multiple checking or savings accounts. So after your pretax 401k and other deductions, you can set your checking account to have “x” amount deposited, and then “all remaining” deposited into your savings account or even your Vanguard taxable account or IRA. This helps with saving because the money doesn’t have to be funneled through your bank account where you could potentially spend it. The only downside is that direct deposit can only go into money market funds, and then you’d have to setup a secondary automatic investment to transfer the money from the money market into a mutual fund, or do it manually.
Great tip Julian. Funneling straight to multiple accounts adds another level of automation. Plus, as you said, it eliminates a step that could otherwise lead to temptation.
Nice guest post. Too many people do it backwards and say they will put the extra left at the end of the month in retirement. Except the end of the month comes and there is nothing left.
We automated not only retirement savings, but saving for cars, college, HOA and car insurance/tax.
Thanks Grant. Glad to hear automation is working out for you!
I tried paying myself first. That lasted about three months, when utility disconnect notices started coming my way.