After my divorce from my gambling husband, my inheritance was all but exhausted, apart from a number of properties that provided me with a small monthly income. But I did something smart.
When the property rent got here in, before I’d spent a dime, I’d put a portion into my savings account. I did it robotically. I filled out a form and the bank took the remaining.
I didn’t even should give it some thought. And regardless that it wasn’t much, it’s amazing how my savings grew over time.
Later, as the cash piled up, I automated my investments using a way called dollar cost averaging (DCA). DCA takes the emotion out of investing, reduces the danger of losing a lump sum in a declining market, and lowers costs since you buy less when your investments are expensive and more after they are cheaper.
Maybe you have got already automated your saving and investing. Nice for you. But if not, I urge you to achieve this.
Agree that the bank will transfer fixed amounts to the savings account on a hard and fast date every month. The date ought to be at the least a number of days after the cash was received.
If you have got a couple of savings goal – for instance, constructing your emergency fund and taking a vacation– Set up a couple of savings account.
I like to recommend putting 6-8 months of living expenses into an emergency fund. Once you have got this cushion, you’ll be able to robotically start investing.
What I really like about automation is that it’s painless. What you do not see, don’t miss. And it’s pointless. No disciplinary motion or reminder notices are required.
Investopedia has a wonderful article on Dollar Cost Averaging, Here.
