Automatic Savings Plans: How to Set-Up

The easiest way to make sure you save a percentage of your income each and every pay period is to pay yourself first with an automatic savings or investment plan. 

I've already talked about considering your savings or investment as another expense that you must pay. Now let's talk about setting up an automatic payment as if it was made to one of your creditors.

Then you can forget about it. The money is invisible to you, and you will learn to adjust the rest of your spending habits to the income you have after your savings or investments are made.

If you receive a paycheck from an employer, you can usually designate a certain percentage of each pay period to your employer’s retirement plan (if such is offered) or to a savings account (more realistic here in the Philippines).  

Some employers will allow you to have more than one direct deposit created, which means you could contribute a specific amount or percentage of each paycheck into your retirement plan or brokerage.

If you are self-employed or receive income sporadically, you can still take advantage of the “pay yourself first” strategy. Difficult but not impossible!!! Each and every time you receive income, deposit a specific percentage in a designated savings or investment account before you use the money for anything else. This requires more financial discipline than having your employer deposit the money before you get paid, but if you make it a habit, you can still pay yourself first and benefit.