The mechanics of saving money are simple: put it in a savings account instead of spending it.
For most people, the execution is a little trickier.
That’s why Fredrick Petrie, author of “The End of Work: Financial Planning for People With Better Things To Do,” recommends a strategy to get more money out of your wallet and into the bank.
“Savings is 20% numbers and 80% psychology,” Petrie told MainStreet.
MainStreet writes that Petrie believes “most people start by budgeting everything else and seeing what they have left over for saving and investing,” rather than considering savings an immediate priority.
Here’s the trick he shared with MainStreet:
“My twist is that I suggest ‘taxing yourself.’ Make yourself your own mini-IRS,” Petrie says. “You are more likely to put it aside if you are forced to as a tax. Put 10 cents of every dollar that comes into your hands somewhere where you are less likely to spend it. Successful saving first requires ‘psyching yourself out.'”
Whether Petrie’s suggestion will work for you probably depends on how you view taxes. If the word “tax” makes you recoil in horror, you might want to try another psychological trick, like calculating how much money you need to afford a week of freedom in retirement.
On the other hand, if you’re a rule-follower who views paying taxes as a mandatory chore for the eventual good, this hack might work for you. Try making the execution even easier with an app like Digit, which automatically and regularly transfers predetermined amounts of money from your checking account into savings.