Why not spend it?

If you are like me, you love to have money that is available to spend. Generally if I do have a little extra, I spend it. I might not buy one big item, but it seems like it sort of trickles out of my account until it is gone.

Once I tracked back and tried to find out where it went. I found out that I had spent the money on relatively worthless things. I believe I spent it just because I had money in my pocket. Eventually I realized that the best way to actually save money and not waste it, was to just never see it.

There are two main ways to tuck away money without seeing it – payroll deductions and automatic transfers.

Payroll Deductions

This is a wonderful method because the money NEVER gets to your bank account. It goes straight into an account that you direct it to. Here are the most common automatic deductions that I have run across:

Retirement Accounts

When you setup a 401(k) or 403(b) savings account. It’s really the only way that you will be able to contribute to your retirement through a payroll deduction. It’s also an important deduction because it is taken out of your check BEFORE taxes. That means that you are taxed less and therefore – get more money in your pocket.

Investment Brokerage, Bank or Credit Union Accounts

This is a great way to put away money for a specific purpose or just for an emergency fund. Your employer will have to allow it, but it’s great because it’s out of sight, out of mind.

Flexible Spending Accounts

Although this one is not a strict savings account, you are putting money away to either pay for medical expenses or child care. The flexible savings account like a 401(k) or 403(b) is taken out of your check BEFORE taxes.

Automatic Bank Transfers

The prevalence of automatic bill paying and online banking has really opened up some interesting doors for automatic saving. For instance, you can treat your saving as another bill and setup your account to automatically transfer some money from your checking account to your investment account each month. Plus monthly deposits to your investments is an incredible way to gain wealth.


Securities America and its representatives do not provide tax or legal advice. Tax-law is subject to frequent change; therefore it is important to coordinate with your tax advisor for the latest IRS rulings and specific tax advice, prior to undertaking an investment plan. Any tax or legal information provided here is merely a summary of our understanding and interpretation of some of the current income tax regulations and is not exhaustive. Investors must consult their tax advisor or legal counsel for advice and information concerning their particular situation.

Diversification can be thought of as spreading your investment dollars into various asset classes to add balance to your portfolio. Although it doesn’t guarantee a profit, it may be able to reduce the volatility of your portfolio.