Broke-ish to Functioning: Step 2
Step 2: Create an Auto Savings
Start here if you haven't read the Introduction or Step 1
Pay yourself first.
You already did the hard part in Step 1: you figured out your numbers.
Now it’s time to pick a number.
The goal of this step is simple: create a bare-minimum savings amount that happens automatically, before you have the chance to spend it.
There are two easy ways to decide how much to save.
Option 1: Pick a Set Amount
Decide on a number you know you can realistically handle.
Maybe that is:
$25 every paycheck
$50 every paycheck
$100 once a month
Whatever number you choose, build your budget around it.
Treat your savings like a bill that has to be paid.
Not something you do if there is money left over.
Option 2: Save Half of What Is Left
Do your monthly budget first.
After your bills, expenses, and normal spending are accounted for, look at what you have left.
Then cut that number in half.
For example:
If you have $200 left over every month, put $100 into savings and keep the other $100 as a buffer.
Why?
Because life likes to show up uninvited.
Gas costs more than expected. The dog needs something. The electric bill jumps. You forgot about a subscription.
We are trying to get from Broke-ish to Functioning, not from Broke-ish to “I transferred every penny into savings and now I’m stressed again.”
You need breathing room.
Make It Automatic
Once you choose your number, automate it.
Set the transfer for payday or the day after payday so the money moves before you start spending.
The less you have to think about it, the better.
That is the whole point.
You are building a system instead of relying on motivation.
Bonus Move: Use a High-Yield Savings Account
If you are going to save money, it might as well earn a little something while it sits there.
A high-yield savings account, or HYSA, usually pays a higher interest rate than a traditional savings account.
Capital One 360 Performance Savings is one example of this type of account.
Another thing I like about keeping savings separate from your everyday checking account is that it creates a little friction.
If the money takes a few days to transfer back to your regular bank, you are less likely to touch it for something random.
Like the cute pair of shoes, you definitely did not need but somehow ended up holding in the middle of Target.
That little delay gives you time to ask yourself:
Do I actually need this, or am I about to rob Future Me?
This Is Your Bare Minimum
This part is important.
The amount you choose in Step 2 is your minimum savings goal.
This is the amount you want to save consistently, even during a normal month.
Later, Steps 5, 6, and 7 are where we start pushing harder.
That is where we look for extra money, cut expenses, throw additional cash toward goals, and really start making progress.
But not yet.
For now, we are creating the habit.
Even if your automatic savings is only $20 or $50, you are proving to yourself that saving money is part of your budget now.
Not an afterthought.
Not something you will start “when you make more money.”
It starts here.
Pick your number. Automate it. Leave it alone.
That is Step 2.
Comment below.
Are you Team Set Amount or Team Save What’s Left?
Comments