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Once you have a clear view of your money flow, the next step is comparing your saving capacity versus your goals. Then ask yourself, “are my goals realistic?”. If your savings fall short from your goals then is time to answer some harsh questions like “are you going to adjust your spending/saving behavior or are you going to adjust your goals to a more realistic scale?”. Any of these strategies are OK. Each individual will struggle against different conditions that make certain goals simply unreachable (at least withing certain contexts). Learning to adapt to reality is a very important part of getting a better handle of your money.
Compartmentalizing your money is a clever trick to simplify things when trying to track each transaction. The best way to do this is keeping your money in different bank accounts, each with a different purpose. We recommend the following: have a checking account with all the money needed for monthly expenses, a savings account your emergency funds, an investment account for short-term projects (like vacations) and an investment account for long-term projects (like buying a house or retirement).
If you can make sure that a set amount is available in your account at a particular moment of the month, then technology can make your life much easier. Staying on top of each for of debt can be difficult, so, making some of those processes automated can save you a lot of effort and time. For those with a direct-deposit paycheck, you can configuration things in such a way that the money is automatically transferred to different accounts. Bill payments and online payments can also be automated.
Some retirement plans are sponsored by your employer like the 401(K). This means that you have access to a certain amount of money from your employer. This money is not realy meant to be wasted, is actually meant to go to your retirement account. These plans are great to save money for the future. If things are arranged properly, then per each percentage from your paycheck send to your retirement account should be equal to the amount deposited by your employer. For example, if you send 5% your employer adds the same amount.
