Timing is so, so important. Even though your monthly household budget is essentially just an amalgam of addition and subtraction, there's a mental difference between pulling out your money for saving at the start of the month versus the end. And there's one simple thing you can do to make that saving easy and painless...
Have part of your pay deposited to a savings account.
If you're part of the 75 percent of consumers who receive their paycheck via direct deposit, there's a simple way to speed up your savings. Once Uncle Sam takes his cut, split the remainder of your pay into two (or more!) parts:
1. What you need to live.
This figure should be the result of a detailed budget. Total up your rent, insurance, loan payments, utilities and whatever other recurring bills you have, then add bucket amounts to cover your more discretionary spending for the month (like food and transportation).
Once you know how much you need to live for the month, have that amount deposited to your checking account monthly, and – here's the important part – only that amount. You'll need to spread your monthly total across however many pay periods there are. And you might want to build yourself a little cushion for extras. But the goal is to stick to a pre-determined amount for your monthly spending.
2. Everything else.
After monthly expenses are taken out, you can have the remainder of your pay deposited into one or more savings accounts. Some people like to split savings between an emergency savings account and accounts earmarked for other goals like a home down payment or a vacation. The important thing is that you're maximizing your savings every month by splitting your cash flow first into an account that lets you spend what you need to live and then stockpiling every extra penny.
Do you do this? Have any advice?