WHAT!?!?!?!?! (Sound of record player being lifted off mid note)
I apologize in advance if you’re one of those crazy people who spend HOURS everyday on your budget and this post made you have a stroke/heart attack/ulcer/athlete’s foot/achy breaky pelvis all at the same time. Even the Mayo Clinic can’t help you now.
Here’s the deal. When it comes to saving money, there’s an easy way and a hard way. The hard way is making up a budget, spending hours trying to figure out the right amount for each category, spend additional hours justifying going over in half your categories, spend additional hours congratulating yourself for being under in the remaining categories, and so on. And then, after all those hours, you realize that your budget is imperfect and you have to redo it again, for the eighth time. Please don’t come to the same parties that I do.
There’s an easy way around this, and that’s to pay yourself first. Figure out what you’d like your savings rate to be, tell your bank to take that money directly off any deposits you make, and it’s done in about 15 minutes. If you have one of those fancy online bank accounts you can probably get this done without even talking to anybody. I continue to advocate this because it’s easy and painless, and you accomplish the exact same thing as the budgeters without spending undue time crunching numbers on a spreadsheet.
And then, when you accomplish it the first month, up the savings rate a little bit. If you can comfortably save 10%, bump it up to 12.5%, and then 15%. Stop once it starts to hurt, and you’re done. No fuss, no muss.
Yes, you’re also going to want to monitor your spending. If you manage to save 10% of your income while going out for dinner 6 times a week and spending $1000 a month on your collection of vintage Beanie Babies, (TOPICAL) I’d argue you’re not really accomplishing much at all. A 10% savings rate for someone like that is basically a failure, especially if that could be 40% with a little dedication.
For me, I don’t even need to pay myself first anymore. I just spend what I’d like on things while being conscious that I shouldn’t go nuts. I’ve been doing this for a while, so I have a pretty good idea what I spend every month. I just double checked, and I’m still on pace to spend under $30,000 this year, even though I went on two vacations and moved to a different city. I’m a simple guy who might spend a little too much on food, but makes up for it by spending 100% of bugger all on everything else. TV and library books make me happy. Nights out with friends combined with adult beverages don’t do much for me.
Also, free chips.
Imagine you had two ways of doing something. One was easy, while the other would take constant adjustment. Yet they both achieved similar results. Which would you choose? Unless you’re some sort of masochist, you’d probably choose the easier path. Which is why you should just pay yourself first and use your additional free time to make some extra money. Or to watch baseball. Or to take candy from small children. Whatever floats your boat, weirdo. Just don’t spend it budgeting.
Good news! The fine folks at TD Bank have put together a a big ol’ bunch of resources on stuff like getting the most out of your money, on general day-to-day money tips, and so on. There are all sorts of videos too, so your eyeballs don’t have to get tired by doing a bunch of reading. Here’s a video on making your finances easy. I’ll dim the lights on my way out.