Piece number two is setting money aside. Many personal finance books will advise that you make saving automatic so you can accumulate money without having to think about it. That can be disastrous for someone on a fluctuating income.
Making savings automatic means setting up a set amount to be withdrawn from your chequing account to be deposited to your savings account on a regular basis. When you don't know how much money will be coming in every week saving a set amount of money could put you into overdraft. Because it's automatic, that money is going to go out whether or not anything went into your account to begin with. I've had cheques bounce because of this.
A better idea is to keep saving conscious and do it manually every week/month/set period of time. You can automate it by setting yourself a reminder via your calendar or cell phone to put money into savings. My method is to deposit any money I make as soon as I make it and then to set aside the money into savings as soon as I get home that night. If I wait until the end of the week I tend to forget. I stick to 20% into a savings account for taxes and 10% into savings. It can be a little embarrassing to deposit 17.00$ into an account and then put 1.70$ into savings but everything adds up over time.
No comments:
Post a Comment