Recently I stumbled onto a pretty neat and useful blog called Debt Round Up.com which is run be a smart dude named Grayson Bell. That’s such a cool name, isn’t it? But anyways, he’s putting together a resource at the end of December documenting a bunch of great personal finance advice from a big group of bloggers. Long story short, he was kind enough to let me join in. The round-up will aptly be called the Best Personal Finance Tips of 2012. Without further ado…here is my entry.
Make Savings Automatic
Several years ago on my blog, I wrote a post titled What My Dad Taught Me About Money, where I documented my Dad’s financial success and a few of his tidbits of wisdom. The one that really sticks out to me was his advice to “put away a little bit of money each month and try to make it automatic”. Meaning have a percentage of your paycheck go directly into your savings account or retirement account. Stay consistent with it and you’ll fairly quickly start to see the benefits of compounded interest.
By making your savings automatic you don’t miss the money, which in my opinion is the KEY reason why this works. If you have to spend time and energy transferring money every month there is a excellent chance you’re going to find an excuse not to do it.
To get back to my Dad, as a man in his late 20′s, he was able to save enough money to buy a tri-plex in Los Angeles in the late 1960′s. He lived in one unit and rented the other two units which paid his mortgage in full. As his tri-plex increased in value, he kept trading up until he owned a large apartment complex and several rental homes. The most amazing part? He did all of this on a teacher’s salary, and now lives very happily in retirement.
So the next time you’re in your bank ask them about your options. It will only take few minutes to set up. Time well spent if you ask my old man.
Do you already make your savings automatic? If so, has it helped you build your savings or emergency fund?