Exploring options for increasing the amount you save each year? There are a number of activities you can do outside of your usual work hours to increase funds flowing your way. There are surveys, part-time jobs, and entrepreneur plights. For most, free time is scarce, so these things aren’t necessarily options. Luckily, there is an alternative for windfalls that are automatically built in to your daily lives.
“alternative for windfalls that are automatically built in to your daily lives”
How can this be? How could you have missed this mysterious extra cash? It may sound rough, but you need to give the 80/20 Rule a chance. What is the 80/20 Rule? Stated plainly, you save 80% of every windfall, leaving 20% for something fun. A windfall includes holiday gifts (whether birthday, Christmas, wedding…), bonuses, tax refunds, and just about any money you receive outside of your regular paycheck.
Applied: Maybe you receive a winter bonus of $4,000? $3,200 of that bonus automatically goes to savings, while you get to enjoy $800. This doesn’t sound so difficult, right? But then there are smaller influxes and the Rule still applies. Your grandmother sends you $100 for your birthday–$80 goes to savings and $20 to you. At that point, might as well save the full amount.
“Ease the blow”
Too harsh? Too difficult? Ease the blow. Rather than starting out with an 80/20 split, try applying a 60/40 Rule for one year and work up from there. It’s not an absolute, and certainly does come before emergency expenses. As strange as it may sound, diligently saving this money can make a world of difference in one year while allowing you to enjoy your free time.
-B&T