Willpower is over-rated. How many times have you vowed to do something starting tomorrow or next week? Tomorrow or next week turns into today and you then find a dozen reason why it’s not a good time to start. That is why it’s important to automate those things in your life. Remove the thoughts entirely.
Implementing a savings plan is the perfect example. I started an automated plan when I began working. Initially I enjoyed having a bit of discretionary cash and spending it for a while. I then set about automating a savings plan.
A separate bank account was opened. Back in those days I was working for a small business and we were paid in cash. Each pay day I would keep a fixed amount of spending money and deposit the rest to a day to day bank account. I had an automatic transfer set up to a savings account for the day after.
It doesn’t have to be some overly complicated process to establish.
My plan was to buy a house. Instead I went on my first overseas adventure. I’m happy I didn’t buy a house. Travel became an important part of my life. It continues to be important to this day. I met two of my long time friends on that trip.
I was able to enjoy that trip and not have to skimp on any activities. I had saved for 12 months and set myself a budget. This wasn’t a quick week long holiday either. Like many Australians, I travelled for about five weeks. It takes us a day or more to get anywhere, so we go for a while.
When I returned I made the decision to move to a larger city in a different state. Lucky I didn’t have that house. Buying and selling so quickly would have meant a sure loss on the sale after costs.
That automated savings plan I started when I was in my early 20s shaped my life then and continues to do so today. It doesn’t have to be some overly complicated process to establish. That will just delay the implementation.
Whilst it’s good to have a goal in mind like I did with a house purchase, it’s not vital. Saving the money can be the initial goal. Simply set up the process and your priorities may change over time. Spend the time thinking about your ideal wealthy life and the paths you need to follow.
These days it is much easier to establish the plan. Depending on the bank, it is easy to set up a linked savings account with a regular transfer. Or better yet, make the savings account at a different bank. Still set up the transfer the same way. The added benefit being you’re not tempted to dip into it if you see the balance when doing your other banking. Choose the best option for a fee free account and no transfer fee costs.
- Do you have some type of automated savings plan?
- Many recommend at least 10% of your income. How much can you save regularly?