Pay Yourself First
It never ceases to amaze me that no matter how much people make they seem to have no trouble spending it as fast as they make it. I have worked with people who make $20,000 a year, and those making $200,000 a year, and the people who make the most seem to be no better at saving than those who make the least. I think it is just written into our psyche that our wants are only limited by our ability to pay. Unless you limit yourself artificially your stuff will expand to consume your earnings.
One of the best lessons I ever learned was to pay myself first. This neatly gets around this tendancy by taking your savings out of your paycheck before you start spending each month. This is the exact opposite of what most people try to do, which is to save whatever they have left at the end of the month, and surprise, most months there is nothing left, so nothing gets saved. Uncle Sam figured this out a long time ago, that is why your income tax comes out of your paycheck before you ever see it. No matter what you make, your take home pay is less, because Uncle Sam always gets his cut first.
What you need to do is something similar. Call up your bank and set it up so that $100 is transferred out of your checking account into a savings account every month right after payday, or $50 twice a month of you are paid twice a month. Never take money out of that savings account to pay everyday expenses, this will for the beginning of your cash cushion. At the end of a year you will have $1200 you didn’t have the year before and most likely you’ll never even miss that extra money, because in essence you never had it to begin with. Once you are comfortable with your new spending say after 3 months you could consider increasing this amount an additional $50. Then keep upping your savings until you reach the highes savings level you can deal with. If you can get yourself up to $200, $300 or more a month you’ll be really starting to make progress toward paying down your debt and achieving your savings goals.
But don’t wait, start saving today. You’ll never reach your goals by sitting on your butt. You must set your priorities, take action, and start moving things is a direction of your choosing. Even a little movement in the right direction will eventually get you to your destination, it might take a long time, but if you don’t move it will never happen. If you pay yourself first, then every month you know you will move a little bit closer to your goals.