Saving money isn’t that hard. What’s hard is keeping money saved.
Willpower is overrated. Set up automatic transfers, and you likely won’t miss the money as it’s whisked from your paycheck to your retirement fund (for example) or from your checking account to savings.
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Part two of the out-of-sight, out-of-mind approach is to make sure you’re not regularly reminded that you have this money. Set up savings accounts at a separate institution from the one that has your checking account, so you’re not seeing your savings balance every time you log on.
Labeling an account with its purpose can be a powerful deterrent to tapping the money for other uses. Online banks allow you to set up multiple sub-accounts at no extra cost, and each one can be given a name: vacation, property taxes, new car fund, holidays and so on. It’s a lot easier to dip into a nameless savings account than one that says “Dream Trip to Bora Bora.”
Digit analyzes your checking account transactions, then transfers money you won’t miss into a Digit savings account. Acorns does something similar but looks across all your accounts and invests the spare money.
You should keep at least ₹37,000 cash easily accessible for small emergencies. Beyond that, consider creating some barriers to accessing the money. Certificates of deposit can be a good option for savings accounts, since you pay a small penalty if you break into them early.
Use a cash-back rewards credit card for your expenses, pay the balance in full every month and regularly transfer the rewards to your savings account or IRA.
Every time you cancel a subscription, disconnect a service or pay off a debt, divert that monthly payment into savings.
Define a windfall broadly as any extra money that lands in your lap: rebates, bonuses, refunds (including your tax refund). Carve out 10% to spend any way you want and then save the rest.
Some people save every $5 or $10 bill that wanders into their wallets. Others stuff every $1 bill they get into a change jar at the end of the day. Every month, feed the green to your savings account.