I Found $1,300!!

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This post is part of the Carnival of Personal Finance hosted at Budgeting in the Fun Stuff.

I was just going over my December's budget and I found $50 every paycheck to invest!  That's $1,300 a year.  It was simple, really.  So simple in fact I never thought of it before.

After months of pulling out my hair and pumping my fists in the air out of frustration every time I sat down to do the budget, after complaining that there is no money left over at the end of the month to save (except in those rare months I get an extra paycheck or some other windfall), I finally figured out where to find that money.

In order to find money to save, you've got to hide it from yourself.

When I did the budget I just subtracted $50 from each paycheck and worked with the new, lower, number.  And you know what?  All the bills still got paid.  Yes, some weeks I will have less "fun" money, but not much less.  In fact, in the next two months I'll only have one two-week period where I "feel" like I have less money  to "do fun stuff."  I've had a lot of months like that in my life and I've managed.  I just do fun stuff that doesn't cost money or at least doesn't cost a lot (come to think of it, every month is like that!)

All this really is, is paying yourself first.  But instead of saying I'll pay myself, if this, or if that, only when... I'm actually doing it.  It's all on paper and on Monday I'll shoot off the direct deposit form from my brokerage account to my human resources office to make it official.

Paying yourself first is something financial planners and bloggers preach all the time, but we all have excuses for not doing it.  Thats why it's key that you actually set aside money before you even see it.  The best way to ensure you pay yourself is to have your money come out of your paycheck, just like your taxes are handled.

The great economist Milton Friedman knew this principle of pay yourself first.  He applied it to your taxes that go to the Federal government.   He's the guy who devised the plan for your taxes to come directly out of your paycheck.  Instead of waiting for you to write a check at the end of each year, the government gets paid first.

And what's good for the goose is good for the gander.  The goose in this case is the government and you are the gander.  You should be doing what the government is doing and getting your share of your hard earned cash.  Automatically set aside money each paycheck for yourself either in a retirement account, savings account, or brokerage account.

Just make sure you do it.

To get more motivation to do this and read about more examples of those who automate their savings and get rich doing it (on any income) read The Automatic Millionaire by David Bach.

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