Hide your money from yourself
OK, this title is a bit over the top, but there is a point I am trying to make. For most people, you get paid every two weeks. What happens when you get that money? Usually it gets put into your checking account and over the next two weeks or so you end up spending that money on rent, Miley Cyrus CD’s, and going out with your buddies. At the end of those two weeks you probably don’t have much left of your original paycheck. Sure, a lot of the stuff you spent your paycheck on was essential (i.e. rent), but a lot of it wasn’t (like your Miley Cyrus CD).
When trying to become more financially responsible, you must remember one thing. YOU are your own worst enemy. This means that temptation often takes over and you end up spending money on a bunch of crap you really don’t need. To alleviate this problem, you need to spend a couple minutes and think of some ways to automatically sock away some savings without any further action on your part (i.e. Hiding money from yourself). Here are the 2 things you need to start doing now.
- Invest in your companies 401k plan- If your employer offers a 401k (or 403b for non profits), go find your HR representative and tell them you want to setup your account. The money will get taken directly out of your paycheck and will get set aside for retirement. It may not sound like the cool thing to do, but believe me, you will want that money when retirement rolls around.
- Start a high yield savings account and setup an automatic biweekly transfer from your checking account. If you get paid on the 1st and the 15th, you should setup your automatic transfer for the 2nd and 16th so this money will get pulled out of your account before you get a chance to blow it on that new Twighlight DVD that you will never watch anyway. If your not sure where to setup a high yield savings account, check out EmigrantDirect, ING Direct, or HSBC Direct. All of them are easy to use and will give you better interest rates than your traditional brick and mortar bank.
Don’t worry about the amount of money you put into these accounts right now. The most important thing is that you need to get these accounts setup. Once you get them setup and automated, you can go back to playing Call of Duty 4 and know that you are pwning n00bs at the same time you are pwning your finances.
