Do you have trouble saving money? Do you live paycheck to paycheck?
Here is an idea that can help.
Have your employer direct deposit part of your paycheck into a separate account.
For example, assume you have a weekly net pay of $500. Take $10 a week and have it direct deposited into your savings account and put the remaining $490 into your regular checking account. Forget about the $10, you probably won't even miss it. After one year you will have saved $520 plus interest. Keep this up for two years and you will have over $1,000 socked away.
Take this idea a step further and set up a total of three extra accounts. Divide up your $500 paycheck. Deposit $10 in an emergency account, $10 for a Christmas savings account, and $10 into a regular savings or investment account. Each time you get a raise, put 20% of your increase in net pay towards your extra accounts.
Saving money this way is easy because it allows you to mentally separate your paycheck. Think of the extra accounts as a withholding tax to yourself. It may take a few weeks to get used to it, but you will learn to live without the money that is being "withheld" from your check.
This method of saving can get you ahead of the constant grind of living paycheck to paycheck. Give it a try!
Showing posts with label direct deposit. Show all posts
Showing posts with label direct deposit. Show all posts
Wednesday, February 28, 2007
Sunday, February 25, 2007
Tax Refunds (Part 2)
Big tax refunds are considered normal. Truth be told, they are a refund of what you overpaid on your tax bill for the year.
Do you overpay your electric or gas bill? How about your phone bill? Well, you shouldn't overpay your tax bill either.
Do you feel this is the only way you can save money? Will you spend it if it is in your normal paycheck?
If so, here are a couple of ideas that you can set up for yourself to "withhold" the money to you instead of Uncle Sam.
1. If your employer allows you to direct deposit your paycheck into more than one account, set up an account to have an equal amount deposited each pay into this separate account.
2. Set up a second account with your bank and have an equal amount automatically transferred to the second account each payday.
Either way, you won't see the money in your normal account. Ignore the fact you have a separate account set up. Instead of loaning the government money interest free, you will be putting it into your account to use later. You won't have to wait for a refund each March. It will already be there waiting for you to use anytime you want.
To calculate how much you should have withheld for yourself, have your tax preparer estimate your taxes for the upcoming year and change your w-4 with your employer. Take the extra amount that resulted from your w-4 change and put it in your second account. You are still having the money withheld, but this time it is to yourself.
Do you overpay your electric or gas bill? How about your phone bill? Well, you shouldn't overpay your tax bill either.
Do you feel this is the only way you can save money? Will you spend it if it is in your normal paycheck?
If so, here are a couple of ideas that you can set up for yourself to "withhold" the money to you instead of Uncle Sam.
1. If your employer allows you to direct deposit your paycheck into more than one account, set up an account to have an equal amount deposited each pay into this separate account.
2. Set up a second account with your bank and have an equal amount automatically transferred to the second account each payday.
Either way, you won't see the money in your normal account. Ignore the fact you have a separate account set up. Instead of loaning the government money interest free, you will be putting it into your account to use later. You won't have to wait for a refund each March. It will already be there waiting for you to use anytime you want.
To calculate how much you should have withheld for yourself, have your tax preparer estimate your taxes for the upcoming year and change your w-4 with your employer. Take the extra amount that resulted from your w-4 change and put it in your second account. You are still having the money withheld, but this time it is to yourself.
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