One of the most popular questions I’m asked is, “How do I go from having no money leftover to accumulating cash?”
One tip I often give my clients is to adopt a zero-based budget. What’s that you ask? A zero-based budget is just a fancy way of saying you should decide two things before you ever receive your paycheck:
- What amount are you going to put into savings each paycheck?
- How much of your paycheck would you like to give away to charity?
Now, here’s the trick – you AUTOMATE those two expenses so that they come off the top of your take home pay. An easy way to make this happen is to ask your employer to direct deposit a specific percentage of your paycheck into your cash reserve account and the rest into your primary checking account. Here’s something else to consider – if your savings account is held at a bank where you can’t easily access the money, you’ll find it will accumulate faster than you ever imagined!
Similarly, when you commit to putting money into your company’s 401(k) plan, your employer will automatically withhold your contribution from your paycheck which means you never get the chance to spend it!
Both of these savings strategies can have a powerful psychological effect on your spending habits because they are automatic and they help you avoid temptation. Let’s face it, saying, “no” to ourselves is the hardest part of budgeting! Next, if you develop the habit of making your charitable gifts the day you get paid, you’ll be able to spend the rest of your money knowing you’ve made a wise financial choice.
If you have any questions about how to adopt a zero-based budget or if you want to talk further about how to get ahead, please email me at firstname.lastname@example.org. I would love to hear from you!