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Maggie McGrath
Day 9: Save $10 and make it recurring. This post is part of FORBES’ 30 Day Money Challenge. Follow along on Twitter with #30DaysOfMoney or with the timeline posted here.
If you’ve heard it once, you’ve heard it a million times before: automate your savings.
This simple piece of advice is repeated so often because it works. Experts agree that inertia is one of the biggest hurdles to wealth creation; as human beings who are prone to procrastination, it’s easy to say, “oh, I’ll save tomorrow,” and just… never get around to it.
This is why automation is so powerful: you make the decision to save just once, then put it on autopilot and never think about it again. When there’s an automatic deduction from your paycheck or an automatic transfer from your checking account to your savings account, there’s no chance of human error interfering. No chance of forgetting, no chance of putting it off. The money goes from Point A to Point B, simple as that.
Financial advisers like to say that you should aim to save 10% or even 15% of your income. It’s not bad advice, but if you’re feeling stretched thin by your rent, your debt payments and the cost of commuting to and from work, you might feel intimidated to the point of not even trying to save. Our advice is to start smaller. That’s why the 9th day of the 30 Days of Money challenge asks you to take just $10 (one Hamilton — #Ham4Savings, anyone?) and put it away. If you don’t have an emergency fund, direct the money there; if your emergency savings are sufficient but you need to jumpstart your 401k, put the money there. But don’t stop with this one transfer: take the extra step of scheduling recurring $10 transfers at the interval of your choosing. If you’re feeling ambitious, schedule an automatic $10 once a week; if not, start at once a month. Whatever your decision, the point is to do something and develop some sort of momentum. By the end of the year, you could surprise yourself with how much you’re able to save.
Want more information? Here’s some light reading for you:
If you’re not sure where to start, here’s complete guide to automating your savings. “No one does anything hard willingly. We need to make a conscious decision to win the lifelong battle against procrastination and laziness.”
If you’re looking for advice on how much to sock away, read this breakdown of three different types of emergencies and how much you’ll need to have on hand for each. The
typical rule of thumb dictates that emergency funds should contain
three to six months’ worth of basic expenses, but ultimately your
savings goal depends on factors including what you own, what your
insurance coverage looks like and what industry you work in.
If you think you’re invincible, think again. There are myriad things that can go wrong in the course of your life, and it’s best to be prepared. Read this to see what your life will look like if you don’t save enough. ”Over any 10-year period, more than three-quarters of adults aged 50-60 experienced job layoffs, widowhood, divorce, new health problems, or the onset of frailty among their parents or in-laws.”
If someone has told you it’s bad to save money when you’re wrong, they are wrong. It’s financial malpractice to not save in your twenties. “If you haven’t been able to save anything, a dollar is better than zero.”
If you want hard numbers to prove why saving early and often is important, consider the following: If you start to save at the age of 25, you could earn an extra six figures in retirement. “Even though Patty technically ‘saved’ less, she earned more — about $130,000 more.”
If you’ve heard it once, you’ve heard it a million times before: automate your savings.
This simple piece of advice is repeated so often because it works. Experts agree that inertia is one of the biggest hurdles to wealth creation; as human beings who are prone to procrastination, it’s easy to say, “oh, I’ll save tomorrow,” and just… never get around to it.
This is why automation is so powerful: you make the decision to save just once, then put it on autopilot and never think about it again. When there’s an automatic deduction from your paycheck or an automatic transfer from your checking account to your savings account, there’s no chance of human error interfering. No chance of forgetting, no chance of putting it off. The money goes from Point A to Point B, simple as that.
Financial advisers like to say that you should aim to save 10% or even 15% of your income. It’s not bad advice, but if you’re feeling stretched thin by your rent, your debt payments and the cost of commuting to and from work, you might feel intimidated to the point of not even trying to save. Our advice is to start smaller. That’s why the 9th day of the 30 Days of Money challenge asks you to take just $10 (one Hamilton — #Ham4Savings, anyone?) and put it away. If you don’t have an emergency fund, direct the money there; if your emergency savings are sufficient but you need to jumpstart your 401k, put the money there. But don’t stop with this one transfer: take the extra step of scheduling recurring $10 transfers at the interval of your choosing. If you’re feeling ambitious, schedule an automatic $10 once a week; if not, start at once a month. Whatever your decision, the point is to do something and develop some sort of momentum. By the end of the year, you could surprise yourself with how much you’re able to save.
Want more information? Here’s some light reading for you:
If you’re not sure where to start, here’s complete guide to automating your savings. “No one does anything hard willingly. We need to make a conscious decision to win the lifelong battle against procrastination and laziness.”
If you’re looking for advice on how much to sock away, read this breakdown of three different types of emergencies and how much you’ll need to have on hand for each. The
typical rule of thumb dictates that emergency funds should contain
three to six months’ worth of basic expenses, but ultimately your
savings goal depends on factors including what you own, what your
insurance coverage looks like and what industry you work in.If you think you’re invincible, think again. There are myriad things that can go wrong in the course of your life, and it’s best to be prepared. Read this to see what your life will look like if you don’t save enough. ”Over any 10-year period, more than three-quarters of adults aged 50-60 experienced job layoffs, widowhood, divorce, new health problems, or the onset of frailty among their parents or in-laws.”
If someone has told you it’s bad to save money when you’re wrong, they are wrong. It’s financial malpractice to not save in your twenties. “If you haven’t been able to save anything, a dollar is better than zero.”
If you want hard numbers to prove why saving early and often is important, consider the following: If you start to save at the age of 25, you could earn an extra six figures in retirement. “Even though Patty technically ‘saved’ less, she earned more — about $130,000 more.”
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