We live Pseudo Paycheck-to-Paycheck lifestyle.
Each month, we start with a set amount of money in our checking account. By the end of the month, the money is almost gone. Sometimes we have to add some money from our emergency saving account to get by. Sometimes we have some leftover to save. Then another month rolls in and we repeat this.
This does not mean that I’m in debt.
Just like some of our bills, we set multiple biweekly or monthly auto-transfers to different saving accounts. The amount of transfers are determined based on the purpose of the saving accounts.
Most of us need to pay bills monthly, right. It’s our obligation whether we like it or not. So we treat saving money as if they are our bills, our obligation. So even when my husband was out of work for three months, we did not stop the transfer. We moved some money from our emergency fund to keep “saving.” The only thing we changed was the amount of money we transfer to our vacation fund because that’s not our priority when he was out of work. We kept other transfers at the same rate including our retirement contribution.
Because we are practicing this pseudo paycheck-to-paycheck lifestyle, we naturally learned to be budget conscious.
Benefits of Pseudo Paycheck-to-Paycheck lifestyle.
You can save automatically without realizing you are saving.
By using this auto-deposit/auto-saving method, money will be deducted from your bank account or paycheck automatically. Just start with a comfortable amount and you will see how easy it can be and how small amount quickly adds up.
You will be naturally budget conscious.
When you have less, you spend less….if you are budget conscious, that is. I see my checking account, which we use to pay bills, going down and down quickly. So we naturally try not to spend money on “things” we don’t need. My husband is a huge coffee drinker but he never goes to Starbucks. When he does, we use “Bing Reward” and get free $5 gift card. If you are using google to search, you might want to switch to Bing instead. You will earn rewards for searching.
Anyway, because of this pseudo paycheck-to-paycheck lifestyle, we now pay more close attention to our everyday spending. This helps us to be budget conscious naturally.
Emergency will be less scary to handle.
Not only your money grows automatically with this lifestyle, you become budget conscious automatically. Therefore, when an emergency occurs, you are automatically ready to tackle the difficult time. You will have some savings to use during the emergency. Also, if you stop your auto-saving temporarily, you will have extra cash each month to use.
Automatic Saving is Smart Saving
Auto-deposit is a convenient way to start saving. Start from $50 a month or even less. I’m sure you won’t feel any damage to your monthly budget. Then maybe you can increase little by little. If you just paid off your debt, use the extra cash to save!
Open a new saving account just for this purpose is another good step to take. Make sure to open a high-yield saving account such as American Express Saving Account, Barclay Saving Account, or GS Bank Saving Account. I normally check Bankrate.com to find one of the best rates.
It takes only about 15 minutes or less to open a new bank account. Once you open and setup monthly or bi-weekly transfer, you are all set.
You can invest the same way. You can save for your retirement the same way.
That’s all you have to do, really. Now your money will be deposited into your new saving account automatically. Instead of your bills getting deducted from your account, your money is now automatically saved and you won’t even notice.
I first started with 100 a month and as I realized it’s easier than I thought, I increased the amount to transfer. The account eventually grew up enough for us to take an $8000 Europe trip, which was approved by Suze Orman!
The key is to forget. Forget the money is being deducted. Forget the saving account exists. Then it’ll simply grow.