On New Year’s, I suggested that instead of a list of resolutions at the beginning of the year, we spread our resolutions out.
Make and execute on a resolution a month.
Ration the amount of change that we expect of ourselves. Take small steps, rather than attempt a huge leap.
Resolution for January
So, for January I propose that you arrange to save the tax cut all employees got from Congress at Christmas.
OK, so it’s small, 2% of your gross check. That’s money that would otherwise have been withheld from your check to fund Social Security.
If Congress hadn’t extended the payroll tax cut, that 2% would have been gone from your checking account anyway. So, you shouldn’t miss it.
Good news or bad news, it’s only 2%. But it will get you a start on banking some part of today’s wealth for tomorrow.
Enlist help
Get a partner in this savings scheme: your employer or your bank. Have the 2% automatically deducted from your account and deposited in a savings account.
I’m of two minds about where your savings account ought to be. It’s simple to have the account at the same institution that holds your working account. Transfers are easy and you can see progress.
Those are probably also the weaknesses of putting your savings where they are visible and convenient. You can get discouraged by the apparent slow rate of accumulation. If the money is too visible, it’s easy to convince yourself that some “need” today justifies invading your savings.
Which leads me to suggest, put the savings account out of sight. Put it out of your mind when dealing with life’s little financial stresses. Put it in another institution; don’t make transfers from savings easy. Make inconvenience work for you.
Start off the new year with a resolve to save just 2%. You may find it painless and want to up the ante to 3%! Or you can see it as a step toward joining the one percent.
Image courtesy of creepyed.
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This post asks the right question, by considering if it’s asking the right question, according to Neal Frankle at WeathPilgrim.com.http://wealthpilgrim.com/carnival-of-personal-finance-ask-the-right-questions-edition/