Learn to live off what you have left – This savings tool is the hardest one in our listing but is the best tool to live by. Living with what you have left is to train yourself to live off only whatever you have left after paying bills as well as money you have set aside. This can best be done by setting up automatic withdrawals for bill paying from your bank account, or better yet your paychecks (so that you don’t even see the money coming in), and you will quickly learn to live off what you have left over. This tool is best used along with the Allowance Tool mentioned previously. This will also save you money if you are the type that always has to pay late payment fees or you are accumulating interest on your payments for back payments. 

Along with setting up automatic payments through your paycheck you should also withhold a small amount from each paycheck that goes into a separate bank account. Give yourself a goal for how much you want to save additionally a month and divide this into how often you get paid and have that amount put into a separate account. Make sure to be reasonable with the amount you put into a separate account. This can be a separate savings account that once it gets big enough you can transfer to a CD to earn higher interest on. Once you have gotten used to this practice you can also discipline yourself by saying anything additional, like bonuses or raises, will also be set aside into a separate account. When you have learned to live off of what you were making before net the withholdings and payments on your bills, this extra money won’t be needed to live your everyday life, it will be an additional savings tool. . The best account to put this extra money into would be an account that is not easily accessible and one that you stopped receiving paper statements for. This way you do not get that monthly statement in the mail and if you receive an e-statement, you should train yourself to not open the file but to put it in a separate folder.  

Remember to start with withholding a few dollars from each paycheck. If you do not have any bills that you can set up for automatic payments, then you can open a new account and put the money into that account. Once you have gotten used to your net paycheck being that much lower, increase the amount you withhold into a separate account. Soon enough you will be withholding money and setting it aside in an account and you will realize how much money you don’t need. Once you realized how much you have accomplished you are more disciplined and want to keep improving. This is great if you are the type that “will spend it if you have it.”

Katie Rubalcaba, Associate Accountant
Davis & Hodgdon Associates, CPA’s
May 2012

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