Tuesday, December 27, 2011

How to Get Rich - Make it Automatic

One of the hardest things to learn about how to get rich is how to actually save the money needed to ensure that someday you will become rich.

As mentioned before, without savings, there can be no wealth. As anything, without input there can be no output.

Yes, you can earn lots of money, but you will still have to learn how to save some of it. Just look at the many celebrities over the years who have earned millions of dollars and have still managed to blow it all. Hard to believe isn't it. They simply never learned how to save.

Fortunately for the average person today, our banks have made it quite easy for us to set aside our savings. You can set up automatic pre-authorized payments into your savings account. What this means is that once a month or once every two weeks you can have your savings portion of your paycheck (hopefully 10% or more) automatically taken out of your checking account and deposited to your savings account.

Where this type of arrangement works the best is when you get the same net pay on every paycheck. I don't believe most banks will be able to transfer a set percentage of deposits per month, but it's worth checking into if you don't have the same amount on every pay.

If you don't have the same amount on each pay, I would still set up the automatic transfer. Make the transfer amount (10% or more) of your lowest net pay period. You can then do a manual transfer on the small portion of the difference on the larger pay later on. A little more cumbersome, but at least you will have most of your savings deposited if you happen to forget to make the manual transfer.

Whatever method you use, make it as automatic as possible. It will be much less painful if you never see the income in the first place. Out of sight out of mind so to speak.Also, you will have a much better chance of succeeding with your savings plan and much less chance of blowing it on something that came up. Something always comes up, doesn't it?

This is truly the only way to pay yourself first. Take it before you see it.

Please remember my previous advise as well. Do not give yourself bank card access or on line access to this savings account. If you do, you may find it leaks back to your checking account when something comes up, therefore defeating all the saving you have done. DON'T TOUCH THIS

Make your savings account very difficult to access. The only time you should take money out of this account is to purchase investments that will make you money.

The more automatic you can make the savings process, the less you will feel the effects of living on less. The more your savings grow, the more comfortable your future life will become. You will truly be learning how to get rich little by little, as your savings grow. Make it automatic.

As always I welcome your comments and suggestions for future topics.

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