Twenty years ago, when I first married, I remember getting our first checkbook as a couple and writing out checks for the bills we owed. There was a sense of pride in being old enough and responsible enough to have bills and to pay them on time.
As you can imagine, this sense of pride soon changed to a sense of dread as the bills continued to arrive in the mail, and like most young newlywed couples, the money to pay them seemed to be barely enough. Although at times it was a challenge, we have always paid our bills on time.
If you're like the average person, you may have paying your bills down to a science but saving regularly can be difficult. Once we have that paycheck in our hands, there is no shortage of places it can be distributed. We tend to first pay the bills we owe, buy the things we need, and if there is any left, we then buy the things we want. Many of us are so good at paying the bills we owe to others that we forget or don't prioritize the money that we should be paying to ourselves.
Increasing your savings may be easier than you think. A great way to increase your retirement savings is to change your thinking by treating your retirement savings as a recurring expense, similar to paying a utility bill, car loan, or rent.
To make it even easier, in most cases the amount can be debited from your paycheck by your employer and sent right to your retirement savings. If the funds are deducted from your paycheck on a pre-tax basis, it can reduce the amount of income taxes you will owe to the IRS. However, before you do this, talk to a qualified financial advisor to see what is best for your situation. If you have the option of a 401(k) with a match from your employer, take advantage of it.
You probably knew that most banks offer online bill pay with a recurring option. But did you know that you can set up a recurring bill to be sent to a savings account or an IRA? Because there are maximum allowable contributions with IRAs, you'll want to be sure that the total amount of this automatic contribution keeps you within the annual maximum allowed or else you will find yourself paying a 6 percent penalty to the IRS.
Realize financial success in life is much more about establishing your own responsible money habits than about movements in the stock market or finding the next hot investment. By creating a habit of treating your savings as an expense, you will be able to turn what would have been disposable and often wasted money into money for your future. And trust me, the future you will someday thank you for it.
Paul Anderson is an investment advisor and partner at Moneywise Wealth Management. He is also a host of the Moneywise Guys radio program on KERN 1180 weekdays 10 a.m. to noon. His email is Paul@moneywiseguys.com and website is www.MoneywiseGuys.com. Advisory Services offered through: SCF Investment Advisors, Inc. Corporate Office: 155 E. Shaw Ave. #102 Fresno, CA. 93710 800-955-2517. These are Anderson's opinions, not necessarily those of The Californian or SCF.