A guide to setting aside a portion of your paycheck for savings. Find out how much of your paycheck you should save.
Saving money from every paycheck will make your future brighter, more focused, and more carefree. While putting money away for a rainy day may not seem glamorous, saving is the key to living the type of life that you want. So let's see how to do it painlessly.
Why Should I Save a Portion of My Paycheck?
Saving a portion of your paycheck helps you achieve your financial goals. Here are just a few of the reasons to save and see how to organize your finances.
Less Stress About Finances
A savings account is a tool. When used correctly, it can make life so much easier. Saving a portion of your paycheck allows you to build up a healthy emergency fund amount that will get you through life’s unexpected expenses. In addition, knowing that your savings are ready should you need help in a pinch can give you incredible peace of mind.
Helps You Build the Future You Want
When you put part of your paycheck aside for savings, it helps you adopt a savings mentality, which is essential for crafting the mindset that ultimately leads to financial freedom. You're putting into practice the idea that money isn't just something that you use to satisfy the needs and "wants" of the day. Instead, money is a tool to help you attain the things that are important to you.
How to Save a Portion of My Paycheck
Now that you know why to save, it’s important to learn how to save. Here are some tips to help you get started.
Identify Your Savings Goal
Having a savings goal will make saving money more intentional. It also gives you the motivation to save. Your money goal should be inspirational. What do you want for yourself for the future? Perhaps you want to buy a home or a new car or maybe a vacation. Whatever your savings goal is, try to visualize it. Have fun and imagine yourself meeting your goal. Do you want to travel the world? Imagine the places that you will visit.
After you have identified what you want to save for, calculate how much money you will need. Think about all of the costs associated with the purchase. For example, if you’d like to buy a new car, make sure you include things like sales tax, title fees, and so forth. An Excel spreadsheet can be helpful for this.
The final step is to set a date. When do you want to reach your goal? If need be, you can break your goal down into smaller steps. So, for instance, if you want to save for a house, you might start with the down payment. Decide when you will reach that goal. Then, save for the closing costs. Choose another date to reach your closing costs savings goal.
Just remember: Progress is worth celebrating. So, make sure you pat yourself on the back when you reach each savings goal.
Redirect Your Money
You’ll need to redirect money into savings for your goal. The best way to do that is to “set it and forget it.” While the portion that's directed to your savings may feel noticeable that first month, you'll quickly adjust to living on less. We recommend setting up a separate account so you aren’t tempted to dip into your savings.
Your "How Much Should I Save Every Paycheck" Calculator
So, how much should you save a month from your paycheck to reach your goal?
To figure out how much you’d like to save, you can configure your exact saving and investing goals in the Monorail app. Once you determine your average monthly expenses on housing, food, and necessities, your leftover funds can be allocated to your wishlist fund, short-term savings goals, long-term savings goals, and stock trading.
See how you can set up your saving and spending system with Monorail.
Setting Savings Goals and Habits
Good savings habits are the key to reaching your financial goals. But, unfortunately, they also take time to develop. So, you have to keep working at them to make them stick. Here are a few tips for getting started on setting savings goals and habits.
Pay Yourself First
How many times have you intended to save money, only to have it disappear almost as quickly as it arrived in your account? The saying “out of sight, out of mind” is so true for saving. Paying yourself first is a game-changer when it comes to reaching your financial goals. This means putting aside money from your paycheck first.
Use Automatic Transfers
You’re most likely to succeed at saving money by making it as painless as possible. That’s where automatic transfers come in. First, pick a day to set up money to come directly from your account. We recommend choosing the same or the next day after you get paid. Then, with your savings coming out automatically, you can use what’s leftover from your paycheck for your living and other expenses.
Download the Monorail app so you can easily set up automatic transfers to your savings.
Start Saving Today
Good savings habits take time to develop. You may stumble and fall from time to time. Just make sure you get back on track with good saving habits. And remember it all starts with your paycheck.
Monorail allows you to directly deposit your paycheck into your account and easily transfer money to each of your financial goals with ease.
See how saving with Monorail can help you with your financial goals.
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