Save in Percentages, Not Dollars, to Avoid Lifestyle Inflation
We’ve already told you that it’s best to treat your savings like accounts . You can do this with a 401 (k), automatically saving a portion of your payday on payday. And if you have the option to automatically deposit a dollar amount or percentage, select a percentage.
On GOBankingRates,Blue Keel Financial Planning’s Charlie Shipman recommends that you automatically save a percentage of your paycheck, rather than a dollar amount, at 401 (k). Thus, when you receive a raise, your pension contribution is automatically increased.
This is simple but helpful advice. It’s all too easy to spend your raise on things you don’t need at the expense of your savings, which in a nutshell is lifestyle inflation. With interest savings, your lifestyle increases in proportion to your retirement savings.
They offer more saving tips in the full post, so be sure to check them out at the link below.
The Procrastinator’s Guide to Retirement for the Wealthy | GOBankingRates