First, decide how much richer you want to be. $1000, $1200, $4800, $5000, $7500 – you get the idea.
How many times will you be paid between now and a year from now? Divide your goal amount by the number of pay periods. Then, have your employer auto deposit that amount from each of your paychecks into a dedicated account that you are not going to touch for the year.
Next year you will become richer!
You are paying yourself and pretending this is a monthly bill that must get paid then the money is gone. As my good friend Warren Buffet says “Do not save what is left after spending, but spend what is left after saving.”
You could use this money as an emergency fund.
Emergency savings should really only be used in the following situations:
- You lost your job and need to continue to pay for basic living expenses such as housing costs and utilities;
- You have a medical or dental emergency…but only after checking to see if you can make payments with no or low interest;
- Your vehicle breaks down and it is your primary form of transportation;
- You have emergency home expenses such as the furnace breaking down, your roof is leaking, or the basement is flooding;
- You have bereavement related expenses such as travel costs for a family member’s funeral or a friend; or
- To avoid insufficient funds/fees.
Or you could use this money for a trip you are planning with your sister and mother next year because your sister is turning 60 and you are turning 50. (Guess what I plan to do when I am richer next year…)
Building wealth doesn’t have to be complicated. The sooner you start, you’ll become richer faster.
If you want to become richer, but you don’t think you have enough money leftover after paying bills, check out Saving Money When There’s Nothing Leftover at the End of the Month and Ideas to Balance Your Budget Without Increasing Income. Or, call LSS Financial Counseling at 888.577.2227, a local MN nonprofit, to schedule your FREE financial counseling session. If you don’t want to wait, click to GET STARTED ONLINE.
Author Paige Best is a Certified Financial Counselor with LSS and she specializes in budget and debt counseling.