automatic savings http://www.wisebread.com/taxonomy/term/15656/all en-US A Step-by-Step Guide to Creating Your Emergency Fund http://www.wisebread.com/a-step-by-step-guide-to-creating-your-emergency-fund <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/a-step-by-step-guide-to-creating-your-emergency-fund" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/2301500208_7136f3fa7d_z_0.jpg" alt="cat and coin jar" title="cat and coin jar" class="imagecache imagecache-250w" width="250" height="157" /></a> </div> </div> </div> <p>Ask any respected voice in the personal finance community what the number one thing you should do to get your finances in order is, and the chances are very high that they'll say you need to start by developing an emergency fund.</p> <p>For instance, Dave Ramsey, author of the &quot;<a href="http://www.amazon.com/gp/product/159555078X/ref=as_li_ss_tl?ie=UTF8&amp;tag=lx04-20&amp;linkCode=as2&amp;camp=1789&amp;creative=390957&amp;creativeASIN=159555078X">The Total Money Makeover</a>,&quot; has this as the very first step in his Seven Baby Steps.</p> <p>Why?</p> <p>Because if you ever lose your job or are otherwise unable to bring in an income, the emergency fund would be your go-to source until you get back on your feet.</p> <p>So how do&nbsp;you go about creating your emergency fund? Here's a step-by-step guide to help you. (See also:&nbsp;<a href="http://www.wisebread.com/emergency-plan-better-than-an-emergency-fund">Emergency&nbsp;Plan:&nbsp;Better Than an&nbsp;Emergency&nbsp;Fund</a>)</p> <h2>Figure Out How Much You Can Save</h2> <p>The first step to creating an emergency fund is to determine how much you can consistently save. Now, if you work a normal job, you probably get paid every two weeks on a Friday. Knowing this, with each pay period, you should be dividing your paycheck between four main categories: retirement savings, fixed costs, regular bills, and savings.</p> <p>Digging deeper, how much money should you send to each category?</p> <p>Let's start with your retirement. Most experts suggest saving 10% of your income. That leaves 90% available for your fixed costs, regular bills, and savings. Fixed costs usually include rent/mortgage payments, food, and transportation expenses. Regular bills include utility, phone, and internet bills.</p> <p>Now, we'll assume you need 85% of your income to pay for fixed costs and regular bills. That leaves 5% available for you to save for your emergency fund.</p> <p>Knowing these percentages, here's how your money should be divided. Suppose you make $2,000 every pay period. In that case, you'd put $200 towards your retirement, $1,700 for your fixed costs and regular bills, and $100 towards your emergency fund.</p> <p>Of course, if you look for ways to <a href="http://www.wisebread.com/10-monthly-bills-you-can-slash">lower the amount you pay for your fixed costs and regular bills</a>, you'll have more money available to build your emergency fund.</p> <p>But if you find that your income is barely enough to meet your necessary expenses and you don't have enough to save, you may want to consider getting an extra job on the side.</p> <h2>Set Your Savings Goal</h2> <p>Now that you know how much you can save, the next question to ask yourself is this &mdash; how much do you want to save?</p> <p>Dave Ramsey suggests that $1,000 is a good amount to start with. In our example above, you're saving $100 each pay period, or $200 a month. That means it'll take you five months to create your emergency fund.</p> <p>Though $1,000 is a good start, most people don't think that's enough. An emergency fund that&nbsp;covers three to six months &mdash; or even a year's worth of expenses &mdash; has been recommended.</p> <p>Let's go back to our example above. If your monthly expenses total $3,400 ($1,700 x 2) and you want your emergency fund to protect you for three months, you'll need to save $10,200. By saving $200 each month, this will take 51 months, or four years and three months.</p> <p>Similarly, if you want ensure that your emergency fund will protect you for six months or a year, it'll take more time. Now after you look at this time horizon, you may get overwhelmed with a feeling of despair.</p> <p>But don't worry. That's why this last step is the most important.</p> <h2>Automate Your Savings</h2> <p>If you&nbsp;had to manually transfer money out of your checking account and into your emergency fund every month, you'd probably give up after a few months or find excuses to spend your money. Fortunately, there's a better, easier way.</p> <p>The simplest way to establish your emergency fund is by setting up an online savings account at a bank such as ING Direct or Ally Bank. After you open up an account, you can set up automatic transfers to occur from <a href="http://www.wisebread.com/7-banks-still-offering-free-checking-and-great-interest-rates">your checking account</a>. Since the money is out of your checking account, it'll be&nbsp;a bit harder for you to access, so you'll be&nbsp;less tempted to spend it.</p> <p>Here's an example of how this would work. If you get paid every other Friday, schedule your automatic transfer of $100 to occur on the following Tuesday. That way, in case there are issues with your direct deposit, you have a few days to cancel a transfer. Although this should rarely happen, it's nice to give yourself some wiggle room.</p> <p>Now you know how to establish your emergency fund step-by-step. By <a href="http://www.wisebread.com/pay-yourself-first-what-it-means-and-how-to-do-it">automating your savings</a>, your emergency fund will grow month after month, even while you sleep.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/darren-wu">Darren Wu</a> of <a href="http://www.wisebread.com/a-step-by-step-guide-to-creating-your-emergency-fund">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/managing-your-short-term-money">Managing Your Short-Term Money</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/pay-yourself-first-what-it-means-and-how-to-do-it">Pay Yourself First: What It Means, and How to Do It</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-to-use-savings-to-pay-off-debt">When to Use Savings to Pay Off Debt</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/emergency-plan-better-than-an-emergency-fund">Emergency Plan: Better Than an Emergency Fund</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-common-excuses-for-not-saving-money">6 Common Excuses for Not Saving Money</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance automatic savings emergency fund savings account Fri, 18 Jan 2013 11:24:35 +0000 Darren Wu 962984 at http://www.wisebread.com 7 Essential Truths for a Successful Retirement http://www.wisebread.com/7-essential-truths-for-a-successful-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-essential-truths-for-a-successful-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/3321572860_8f85dcb00d_z.jpg" alt="man with a camera" title="man with a camera" class="imagecache imagecache-250w" width="250" height="143" /></a> </div> </div> </div> <p>Whether you are in your 20s, 50s, or somewhere before, beyond, or in between, you may find yourself concentrating on the complexities of financial planning. While that effort may be valuable in weighing the advantages of a Roth IRA vs. Traditional IRA, mutual funds vs. ETFs, and more, too much analysis can thwart the task of seeing the forest as you focus on the proverbial trees.</p> <p>As a result, you may unintentionally ignore the basics. Consider these seven essential truths that are the foundation of a successful retirement. (See also: <a href="http://www.wisebread.com/7-tips-for-stress-free-retirement-investing">7 Tips for Stress-Free Retirement Investing</a>)</p> <h3>1. Consistent Frugality Trumps (Attempts at) Great Investing</h3> <p>This truth comes from <a target="_blank" href="http://www.jonathanclements.com/">Jonathan Clements</a>, former personal finance columnist for The Wall Street Journal who now works as the director of financial education for a large financial institution. In his years of interacting with readers and customers, he tells me that those who practice simple frugality routinely enjoy more prosperous retirements than those who pursue greater investment returns.</p> <p>Obviously, great investing &mdash; getting a higher return rather than a lower one &mdash; is desirable. An earlier start and higher levels of savings, though, can trump higher returns. For example, if you set aside $5,000 per year and earn 5% per year as a 25-year-old, you will have more than $600,000 at the retirement age of 65 years; however, if you get investment returns of 8% per year but save just $3,000 annually and get a later start at 35, then you will have less than $350,000 upon retirement.</p> <p>Clements&rsquo;s stance is based on real-life observations, not just theoretical financial projections like mine. In his experience, putting energy and effort into diligent saving (even as an average investor) is more beneficial to a successful retirement than being a great investor.</p> <h3>2. Automation Is Your Retirement Friend</h3> <p>Automation helps you to avoid agonizing about investment decisions on a regular basis. This approach also helps you to avoid inaction and overspending.</p> <p>You do have to set up the accounts, determine monthly contribution dollars, and select investments. But automation means that money will be diverted from your paycheck and checking account to investment accounts without further analysis and anguish.</p> <p>Then, after paying bills, you are free to spend what is left in your checking account. You will have a solid mental picture of your discretionary income and won&rsquo;t fool yourself into thinking that you&rsquo;ll set aside retirement savings next month after you buy a few items on your wish list this month.</p> <p>Over a working lifetime, you can <a target="_blank" href="http://www.gobankingrates.com/personal-finance-olympics/mindless-ways-save-million-julie-rains/">amass wealth by automating contributions</a> to several types of accounts.</p> <ul> <li>401(k)<br /> &nbsp;</li> <li>Roth IRA<br /> &nbsp;</li> <li>SEP-IRA (if you have self-employment income)<br /> &nbsp;</li> <li>Traditional IRA<br /> &nbsp;</li> <li>Regular savings account (for shorter term needs, which helps to avoid borrowing from your 401(k) or taking money out of your Roth IRA)<br /> &nbsp;</li> <li>Health Savings Account (if you have a high-deductible health plan that is HSA-eligible; savings not needed for health needs can be taken as income in retirement)</li> </ul> <p>For guidance on the mechanics of automating your finances, <a href="http://www.iwillteachyoutoberich.com/blog/automating-your-accounts-video/">check out these tips from Ramit Sethi</a>, author of New York Times bestselling book &quot;<a href="http://www.amazon.com/Will-Teach-You-Be-Rich/dp/0761147489">I Will Teach You To Be Rich</a>.&quot;</p> <h3>3. Be Disciplined or Pay Someone to Keep You Disciplined</h3> <p>According to Clements, most people have the knowledge to save money and invest sensibly or can easily acquire the basic tools to prepare for retirement. However, they often lack the discipline to make rational decisions with their money.</p> <p>You may understand the&nbsp;<a target="_blank" href="http://theweek.com/article/index/212397/sell-low-buy-high-are-investors-being-stupid-again">investment concept of buying low and selling high</a>, or similarly, know how to shop for a bargain rather than paying full price for a designer outfit or digital gadget. Still, you might become overly excited and purchase an investment when its price is soaring or panic and sell off investments during a stock market decline. Such emotional reactions can be counterproductive to creating wealth.</p> <p>A good financial advisor can not only design a portfolio of investments, but also keep you from buying high and selling low, calm your fears about risk, and encourage diligent saving.</p> <p>In his novel &quot;<a target="_blank" href="http://www.amazon.com/48-and-Counting-ebook/dp/B00946TWMI">48 and Counting: A Story of Money, Love and Cycling</a>,&quot; Clements provides a glimpse into the life of fictional financial advisor Max Whitfield, who manages $70 million of his clients&rsquo; money. He views his role in this way:</p> <blockquote><p>Max didn&rsquo;t just manage a portfolio&rsquo;s risk, costs and taxes. He also managed clients. In fact, that was how he spent most of his time&hellip;Keep clients invested when they were unnerved by plunging markets. Make sure they saved enough, didn&rsquo;t go overboard on debt, bought the right insurance and had an estate plan.</p> </blockquote> <p>So, if you find yourself routinely making bad financial decisions, even though you have the knowledge to make sound ones, consider engaging a <a href="http://www.wisebread.com/6-mistakes-to-avoid-with-a-financial-adviser">financial advisor</a>. And remember that the right person won&rsquo;t advise you to chase a high-flying investment but will encourage you to take the necessary actions to build wealth over a lifetime.</p> <h3>4. Multiple Income Sources Can Prevent Disaster</h3> <p>We have heard many times,&nbsp;<a target="_blank" href="http://wiki.answers.com/Q/What_is_the_meaning_of_'Don't_put_all_your_eggs_in_one_basket'">&ldquo;don&rsquo;t put all of your eggs in one basket.&rdquo;</a>&nbsp;And it&rsquo;s true that diversifying investments is valuable to long-term financial planning. The idea is that a downturn in one area (say, the local real estate market) won't ruin you financially because you have other ways of making money (such as dividends from stocks).&nbsp;</p> <p>In his book &quot;<a target="_blank" href="http://www.amazon.com/How-Much-Money-Need-Retire/dp/0982289197/ref=la_B008JI5IP2_1_1?s=books&amp;ie=UTF8&amp;qid=1352820919&amp;sr=1-1">How Much Money Do I Need to Retire?</a><i>&quot;</i>, <a target="_blank" href="http://financialmentor.com/about-us/todd-r-tresidder">Todd R. Tresidder, financial coach and former hedge fund manager</a>, argues for diversification not only in terms of a <a href="http://www.sec.gov/investor/pubs/assetallocation.htm">diversified stock portfolio</a>&nbsp;but among all assets that generate income. He states that:</p> <blockquote><p>...passive income must come from multiple, non-correlated sources. A reasonable mixture of TIPS, dividend paying stocks, income producing real estate, inflation-adjusting fixed annuities, and alternative investment strategies would satisfy that requirement. It&rsquo;s also possible to mix in some passive business income, royalty income, Social Security income, pension income, and other sources...Never leave yourself exposed to a single default that can wipe out your financial security.</p> </blockquote> <h3>5. The Future Is Unpredictable</h3> <p>Most of us (including me) plan for the future based on how things have worked in the past. This approach can be useful if you consider that you will probably experience market downturns as well as upticks, have to deal with rising prices because of inflation or other causes, and pay taxes based on perpetually changing tax laws. So, planning based on uncertainty and unpredictability makes sense.</p> <p>Making assumptions that the future will look precisely like the immediate past, though, is dangerous. As Clements explores in his book,</p> <blockquote><p>They [clients] couldn't accept that the future was unknowable and the past was a rotten guide to what lay ahead. They were betting their financial future. Chaos might be the reality, but it was emotionally unacceptable. So they assumed the future could be divined and that [financial advisor] Max had the inside scoop.</p> </blockquote> <p>Several years ago, a financial advisor-sales consultant oversimplified the planning process and pretended that he could predict the future. He recommended that my husband and I invest a lump sum distribution in a certain set of mutual funds. He illustrated the future growth of our money based on the previous five years of fund performance. We didn't take his advice, but if we had assumed that the next five years would work <em>exactly</em> like the past five ones, then we would have lost a lot of money.</p> <p>More sophisticated projections with longer timelines using average returns can also be misleading. Even though the <a target="_blank" href="http://www.schwab.com/public/schwab/investing/accounts_products/investment/mutual_funds/mutual_fund_portfolio/schwab_portfolios">average return of a 41-year-old portfolio</a> may be 8%, you won't get a steady staircase of returns over this time frame but instead experience something akin to a switchback trail in which you move forward and backward as you make progress toward a goal.&nbsp;</p> <p><strong>Average Returns vs. Compound Returns</strong></p> <p>I found Tresidder's discussion about average returns vs. compound returns in his book enlightening. He explains that compound returns portray the reality of portfolio changes because they integrate market ups and downs. Note that compound returns are &quot;always less than average returns because of the way money compounds. If you lose 20% one year and gain 20% the following year, your average return is zero but your account will actually lose money through compounding. In this example, your $100 account drops to $80 in the first year ((100 - (100 x .20)) = 80) and then rises to only $96 in the subsequent year ((80 + (80 x .20)) = 96).&quot;</p> <p>Understanding that returns (and the future) are uneven and unpredictable is essential to retirement planning.&nbsp;</p> <h3>6. Debt Can Weigh You Down</h3> <p>Debt in retirement could be manageable, but ideally, you should have no debt &mdash; not even a mortgage payment &mdash; when you retire. Sure, if your investments grow at a higher return than your loan interest rate, then the math may favor low-interest mortgage debt.</p> <p>But the real problem with debt is that monthly payments increase your personal cost of living and may require you to spend down assets. You can't skip a mortgage payment in the same way that you might decide to forgo luxury seats at an NFL game to watch the game at a sports bar or skip dining at a fancy restaurant in favor of cooking at home. For example, you may need to:</p> <ul> <li>Take greater distributions from retirement accounts earlier, slowing growth in account balances.<br /> &nbsp;</li> <li>Accept Social Security payments or a pension earlier rather than later, possibly reducing the benefit amount.<br /> &nbsp;</li> <li>Tap sources of income during a downturn, which may deplete your retirement balances.<br /> &nbsp;</li> <li>Pay higher income taxes because you are generating more income from retirement distributions or other sources to cover your living expenses.</li> </ul> <p>So, getting rid of debt prior to retirement can benefit wealth building and financial flexibility.&nbsp;</p> <h3>7. You Need a Plan for Meaningful Pursuits</h3> <p>Clements tells me that many people think of retirement purely as a time in which they will relax and enjoy time away from work. But absent <a href="http://www.wisebread.com/deciding-what-you-want-out-of-retirement">goals and purpose</a>, pure leisure becomes tiresome after a few weeks.</p> <p>His book follows Max as he loses his wealth management firm in the aftermath of a midlife crisis, obsession with cycling, and extramarital affair. However, at 48, he becomes energized at the prospect of rebuilding a similar company.</p> <p>Now that Clements brings up this topic, I can think of many people in their late 60s and 70s who have continued to work beyond the standard retirement age. Most, however, are not spending 40 hours each week at a traditional workplace. They are running a small business or doing some form of freelance work, such as selling artwork, coaching a high school sports team, organizing bus trips, or growing plants for sale.</p> <p><a target="_blank" href="http://www.psychologytoday.com/blog/hidden-motives/201111/the-new-look-retirement">Ken Eisold, Ph.D., elaborates on this idea of purpose</a>&nbsp;beyond financial concerns. He says that, &ldquo;on a personal level, those who keep working also often feel more useful and relevant. Unless retirees find stimulating and socially valuable activities, they undergo a kind of marginalization that makes it more difficult to maintain&nbsp;self-esteem&nbsp;and overcome&nbsp;depression.&rdquo; So, when you are planning retirement, consider what challenges you&rsquo;d like to tackle and not just the vacation home you want to have.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="http://www.wisebread.com/7-essential-truths-for-a-successful-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-avoid-running-out-of-money-in-retirement">6 Ways to Avoid Running Out of Money in Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/boost-your-retirement-savings-avoid-401k-fees">Boost Your Retirement Savings: Avoid 401(k) Fees</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-is-keeping-you-from-a-life-of-financial-independence">What is keeping you from a life of financial independence?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-steps-for-a-womans-financial-self-defense">6 Steps for a Woman&#039;s Financial Self-Defense</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/book-review-retire-on-less-than-you-think">Book review: Retire on Less Than You Think</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Frugal Living Investment Retirement automatic savings diversification retirement planning Mon, 03 Dec 2012 11:00:39 +0000 Julie Rains 955729 at http://www.wisebread.com Pay Yourself First: What It Means, and How to Do It http://www.wisebread.com/pay-yourself-first-what-it-means-and-how-to-do-it <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/pay-yourself-first-what-it-means-and-how-to-do-it" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/6793826885_d3b6befb99_z.jpg" alt="piggy bank on dollars" title="piggy bank on dollars" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>If you have ever read a retirement planning brochure or any website about investing, there&rsquo;s a good chance you have read the phrase &ldquo;pay yourself first.&rdquo; Some financial experts refer to this as the Golden Rule of Personal Finance! But what does it mean to pay yourself first, and how exactly do you do it? (See also: <a href="http://www.wisebread.com/a-comprehensive-guide-to-the-debt-snowball-method-0">A Comprehensive Guide to the Debt Snowball Method</a>)</p> <h3>Pay Yourself First:&nbsp;What Does It Mean?</h3> <p>This commonly used phrase refers to the practice of automatically making a savings contribution or investment with your income before it can reach your wallet. You &ldquo;pay yourself first&rdquo; when you contribute a percentage of your income to your retirement plan or savings account each pay period. The transfer to your savings or investment account is done automatically, before you receive the rest of your income for paying your monthly living expenses. When you pay yourself first, you ensure the specified amount of money you want to save really does make it into your savings account or investment, since it happens before you have the opportunity to use the money for something else.</p> <p>If you don&rsquo;t pay yourself first, you will probably find yourself at the end of each pay period or month without any money left over to save or invest. If you plan to save what you have after you pay your rent, groceries, loan payments, credit cards, and entertainment costs, there is a very good chance that there will be no money left after your expenses and discretionary spending. Making the decision to pay yourself first removes the temptation to skip a planned contribution and keeps your savings and investment goals on track.</p> <p>Creating a system for paying yourself first establishes a priority for your savings and helps you develop strong financial habits. People who spend their money in the reverse order &mdash; paying everything else before saving &mdash; generally reach their retirement years without a nest egg.</p> <h3>Setting Up Automatic Savings Plans</h3> <p>The easiest way to make sure you save a percentage of your income each and every pay period is to pay yourself first with an automatic savings or investment plan. Consider your savings or investment another expense that you must pay, and set it up just as you would any other <a href="http://www.wisebread.com/how-to-set-up-automatic-payments">automatic payment</a> made to one of your creditors. Then you can forget about it. The money is invisible to you, and you will learn to adjust the rest of your spending habits to the income you have after your savings or investments are made.</p> <p>If you receive a paycheck from an employer, you can usually designate a certain percentage of each pay period to your employer&rsquo;s 401(k) plan or to a savings account. Some employers will allow you to have more than one direct deposit created, which means you could contribute a specific dollar amount or percentage of each paycheck into your 401(k) plan, and a specific dollar amount or percentage of each paycheck into your savings account.</p> <p>If you are self-employed or receive income sporadically, you can still take advantage of the &ldquo;pay yourself first&rdquo; strategy. Each and every time you receive income, deposit a specific percentage in a designated savings or investment account before you use the money for anything else. This requires more financial discipline than having your employer deposit the money before you get paid, but if you make it a habit, you can still pay yourself first and benefit.</p> <h3>Additional Tips for Paying Yourself First</h3> <p>The biggest challenge of paying yourself first seems to be the mentality of <a href="http://www.wisebread.com/6-common-excuses-for-not-saving-money">not making enough to save</a> and finding it hard to get started. If you feel like you aren&rsquo;t making enough money to save, try starting with a very small amount, such as 1% of your income. From every paycheck or income received, simply save 1% of the amount, each and every time. You will not miss this amount, and over time, you will have saved some money.</p> <p>When you pay off existing debts and find yourself with more discretionary income each month, or when your income increases due to a pay raise or promotion, you should increase your savings percentage.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/debbie-dragon">Debbie Dragon</a> of <a href="http://www.wisebread.com/pay-yourself-first-what-it-means-and-how-to-do-it">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-8"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-to-make-when-you-get-a-new-job">7 Money Moves to Make When You Get a New Job</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-technology-can-streamline-financial-management">8 Ways Technology Can Streamline Financial Management</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/a-step-by-step-guide-to-creating-your-emergency-fund">A Step-by-Step Guide to Creating Your Emergency Fund</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/jobless-americans-paying-fees-for-unemployment-benefits">Jobless Americans Paying Fees for Unemployment Benefits</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-financial-moves-to-make-when-a-loved-one-dies">12 Financial Moves to Make When a Loved One Dies</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance automatic savings direct deposit pay yourself first Wed, 28 Mar 2012 10:24:29 +0000 Debbie Dragon 913197 at http://www.wisebread.com