When you change income levels, or even when you have varying bills from month to month, its tempting to adjust how much cash you keep easily accessible. If you really want to save, however, place a hard cap on those liquid assets, no matter how much you make. Past a certain point, you only need so much money on hand day-to-day to get by. You need enough to pay bills, buy food, and have a little to spare for entertainment. If youre able to save beyond that, the ever-increasing number in your savings account can tempt you to spend it. Personal finance blog First Quarter Finance suggests limiting this amount, no matter your income, and placing everything else in investments. I invest a huge portion of my money so I never really have a bunch of cash just lying around. I used to joke with a girlfriend that I didnt have money because I spent it on my mutual fund expense ratios. Thats not really spending it, Will. Right now, I save 85% of my income. Most of that gets invested in equities. I save 50% in my Roth 401(k), 10% into my Employee Stock Purchase Program, $5,500 annually in my Roth IRA, and the rest of what I dont need to live off of in a taxable account. So essentially, Ive severely restricted my money wasted possibilities. Its no secret that money you never see is the easiest to save. However, your budget can change from month to month, and your income can change from year to year. Both are subject to lifestyle inflation on either a small or large scale. If you know exactly how much you have to spend–even in petty cash–every month, it becomes hard to go over and easy to save. Why and How to Make Yourself Poor | First Quarter Finance via Rockstar Finance Photo by Sean McMenemy. #SuperlotBiz
Posted on: Wed, 23 Jul 2014 18:52:27 +0000
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