Three Ways to Create Healthy Financial Habits

As legendary investor Warren Buffet puts it, “Don’t save what is left after spending; spend what is left after saving.”  Set a savings goal and decide what percentage of your income you want to put toward that goal for every pay period.  An automatic transfer puts that money into your savings account every time you get paid, making it easier to meet your savings goalsmeet your savings goals and less tempting to spend that money on something else.

Another simple way to automate your financial life is to set up auto-payments for your bills.  If you have recurring bills that you budget for every month (like a cell phone bill or a monthly loan payment), you can use auto-pay to make sure those bills are always paid on time. If you have the option to choose your payment dates, set them up shortly after your paycheck is deposited into your checking account.

With savings and bills withdrawn early in the month, you’ll have a better sense of what’s available for other expenditures.  An added benefit: you’ll never be hit with late fees again!

If your employer offers a retirement plan, such as a 401(k) or 403(b)401(k) or 403(b), sign up to have your contributions automatically deducted from your paycheck.  These plans place a portion of your pre-tax income into a retirement account, giving you a lower taxable income during your working years, and growing your long-term savings to provide you income during your retirement.  If you don’t have access to a retirement account through your employer, you can make automatic contributions into an IRA account instead.  Automatically depositing part of your paycheck into a retirement account means that money never lands in your checking account, so you won’t be tempted to use it elsewhere.