Most of us are weaklings when it comes to money. There are so many fun things to buy and interesting ways to spend. How can we keep on track?
The simplest way to ensure you actually save for the future is to use automatic savings plans. There are many ways to pay yourself first. Systematic investing through automatic accounts help you stay on track with your long term goals.
One method of automatic saving is through your own bank. You can arrange to have an specific dollar amount withdrawn from your checking account each month, much like paying a bill. The money can then be transferred into a savings or money market account. This is a great way to save for shorter term goals. Even a $100 a month can make a huge difference.
Another easy arrangement is through your paycheck. If you currently have your employer electronically deposit your paycheck into your bank account, have them divide up the amount between your checking and savings. This way you are never tempted to not save one month, as the money is hidden from you before you even know you have it.
Regular investing also helps with larger goals like retirement or estate planning. When you place a smaller amount into your 401K or IRA each month, it helps balance out the short term market fluctuations.
Even if you are investing for financial growth, in stocks, bonds or mutual funds, a regular contribution is better than a once a year payment. If you are contributing a set amount each month to your investments, then you are less likely to overreact to market fluctuations. This is known as dollar cost averaging, where you always pay your account with the same amount. Thus, you are buying less shares of stock when the market is high and more when it is low. This basically removes the emotion to allow your money to work the best for you.
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