I’ve written about the idea of a 100% personal tax, which is the idea that whenever you buy something that isn’t a necessity, you impose a 100% tax on yourself that goes toward your savings account. This is a forced savings tactic which helps put your spending in perspective. If you have a difficult time saving and you think you spend too much, consider imposing a personal tax on yourself, whether it’s 50%, 75%, or 100%.
The Problem With a Personal Tax
One complaint I’ve seen about the personal tax is that is forces us to transfer money from a checking account into a savings account after each purchase. If we wait until the end of the month, the money might be already spent and it might be impractical to make a large transfer. If the money is left over at the end of the month, you probably don’t have a savings problem, anyway.
The Personal Tax Solution
Well, there’s a perfect solution to this problem. At the end of each week, or month, transfer the amount of your discretionary spending to your savings account. The more frequently you do this, the more likely it is that it will work!
If you’re having trouble saving each month and want to do a better job saving for a rainy day, for a vacation, or long-term goals, check out SavedPlus and consider using a personal tax. Start at 10%, and if you can, try to increase the savings percentage each month.