For most people the word budget brings up thoughts of eating nothing but Raman noodles and the anxiety that comes with keeping track of every dollar they spend.
I like budgets and knowing where my money is going every month, but I wasn't always like that.
Today I want to share with you the best budgeting tool I've used that has simplified my saving; whether you like budgets or not I know it'll work for you. Automate your saving, because you know that come the end of the month there's never as much left over for saving as planned. By setting up an automated plan to save money, you no longer have to have the discipline necessary to stick to a budget. Ill go over the steps I've taken to automate my saving and others that may work for you.
STEP ONE: How much do you need/want to be saving every month?
Determine how much you want to be saving every month, This number is going to be different for everyone given their income, payments, savings goals. You still need to cover your basic needs ( rent, groceries, utilities etc.), but decide on a pre-determined amount that you can save each month. Once you have the amount that you want to save each month you can set up the systems to automate this process.
STEP TWO: Automating your savings
There are a few ways that you can automate your saving, some of you might have access to more options depending on your employer and their plans. Does your employer have a RRSP( registered retirement savings plan) matching plan or contribution plan? Some employers have a program where they match your contribution to your savings up to a certain percentage ( If you have this please take full advantage and contribute up to the max limit you will thank yourself later). The easiest way to automate your savings is to get your employer to take a percentage off of your check before you even see it. It will go into your savings and after the first couple checks you probably wont even notice the difference in your standard of living.
Now you might be saying my employer doesn't have a plan like that or I'm self employed, and thats ok you can still automate your saving. If you have regular pay periods, set it up with your bank or a third party investment company to transfer a pre-determined amount the same day as you get paid. Your pay check goes into your account and the same day money is transferred to your savings without the chance of you spending that money. If your money isn't in investments its best to make it difficult to get at. you don't want to be able to easily transfer your savings into your checking account because you may be tempted to spend it when something shiny catches your eye.
I use Wealth Simple for my automated saving and investing. Once you determine the type of savings account and portfolio that you want to invest in its very easy to link up with your bank account and automate your saving. Im sure there are a number of other investment companies that can do the same thing, but I've found them to be simple to set up and use.
Another way to automate your saving and save yourself from your spending habits is to increase the percentage of income taxes that are being taken off of your check. Have you ever had a year where you get money back from the government at tax time, feels pretty good. The best part is you didn't miss that money all year, its like a nice bonus. Ask your employer to increase the percentage taken off for taxes and at the end of the year you'll get a sweet check from the government, which I would suggest then putting into your savings/investments. Some people would argue that its better to have that money and put it into an investment that will gain interest for you and I would agree, however if you're struggling with the discipline of saving money chances are you'll end up with more money by having the government hold onto it for you.
When it comes to saving money for a down payment on your first house, a new car, or your retirement, automation is best. You don't need discipline or a budget to save, make it easy on yourself and set up automated systems. Im sure you've read or heard this before from a friend or parent to save 10% and pay yourself first and if you did only one thing for your financial future it would be to put this in place today. Even if you automate a portion of your saving and increase the amounts later on its important to have the systems in place. Its easy to spend money I think we can all agree, especially today when you just have to tap a plastic card to a machine and you can buy whatever you want. Its easy to spend and we need to make it easy to save, so automate your savings wherever you can.