Make it Automatic
You’ve heard it before; put money away for emergencies.
We know it’s the right thing to do.
It’s just so hard to get organized.
It’s hard to find a way to put money away when you’re just starting out. There are so many other things you could use it for.
Deep down, you know an emergency fund is a good idea, but you don’t make much money. How are you supposed to save when you can’t pay your bills?
Do you wish there was an easy way to save for the unexpected things that happen in life?
Shit Happens.
I still remember the sinking feeling when my car broke down and I didn’t have the money to fix it. I ended up using my credit card, which was costly in the end.
More on credit cards later.
We’ve all been there. Juggling work and home life while trying to pay your bills is difficult and it seems that there is never anything left at the end of the month to put into savings.
The book “The Automatic Millionaire” by David Bach really clicked with me the first time I read it.
Money in the bank.
What would it be like to feel better about your money without the daily pressure of your debts? It’s so hard when you have to use your willpower to pay debts or save money. This book can change the way you think about money.
It’s not really about becoming rich, even though that’s what this book focuses on. For me, it’s about earning enough for what you need.
It’s not what you earn, it’s what you keep.
Many people think that getting rich is making more money. We all know that the more we earn the more we tend to spend, which makes it really hard to save.
This author talks about becoming rich by spending less than we earn and saving the difference.
The Latte Factor
One thing David Bach is famous for is the latte factor. He says you could save money by doing one small thing each day. Cutting out your daily latte is the example he uses.
Everyone has a latte factor. Your might be buying magazines, or eating out. Finding your latte factor creates a habit of slowing down your spending, especially the small amounts. It makes you look at what you do with your money every day.
Make it Automatic
Trying to save and spend less can be difficult, especially if you are trying to break some bad spending habits. You have to remember to put aside that money each month and things get in the way.
You don’t have to work so hard.
The Automatic Millionaire suggests you bypass yourself by making it automatic. I was inspired to set up a savings account to pay myself first, and once I saw how well it worked, I shifted more and more of my finances to automatic.
Automatic is one of my favorite ideas for saving and paying off debt and this book takes it to the ultimate level.
‘Going automatic’ removes the need to make the same decision again and again. You decide that you want to save a certain amount monthly, set it up automatically and it’s done.
Your goal may not to become a millionaire, but the ideas in this book can get you there if you put them into use early enough. And even if you are starting later in life, it’s still OK, because this book will help you kick start your savings.
The good news is there is a quick and easy way to start. It takes about 10 minutes.
You only have to do this once.
You need online banking and at least two accounts: A chequing account and a savings account.
For this example, I’m assuming that your pay cheque is automatically deposited into your chequing account. I’m also assuming that you get paid every other Friday. (biweekly)
- Go online and click on your chequing account.
- Select pay bills and transfer funds.
- Choose transfer funds and set up a transfer for a small amount ($15 for example). Feel free to use a different amount, but start small.
- When: for your first transfer, choose the day after your next pay date.
- Frequency: choose biweekly. This sets up a transfer for every other Friday, to match the day your pay cheque is deposited in your bank account.
- Select 100 times, so that the transfer will keep happening until you change it.
- Then click save or submit.
- Now forget that the savings account exists. If you don’t look at it, you won’t spend it.
It’s that simple. You’ve chosen a small enough amount that it won’t be missed, and if you leave it alone, it will slowly accumulate into a decent emergency fund.
Go Automatic. It’s worth it.
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