I really wanted to name this entry "Back Asswards" (if there is such a word) then changed my mind on that one. But really, that is how my savings plan was going. Now I want to set it right.
I save and do so automatically, but saving in a backward fashion - hence the title. It is only now that I figured out that I should have started with a target amount that I set for an annual amount to save then work backward from that point. Duh!
In order for me to build a cushion of a hypothetical amount of $10,000 in one year, I need to set up an automatic deposit of $833.33 per month into my savings account or $416.66 bi-weekly paying myself first out of the bi-weekly paycheck. Instead I selected a loose amount with no goal in mind and ultimately set the bar too low for my automatic savings.
Once I set my course and made my deposit, I would then pay my bills and make any necessary adjustments to my savings according to this method. This would allow me to save the maximum amount possible while paying my regular bills on time.
Another suggestion that I read is to set up three accounts. One for regular bills, one to save for emergencies or big ticket items and the final account would be for more discretionary, non-ssentials.
Now I go back to the drawing board to make things right.
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