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Following The Rule Of 10% Is Easy And The Savings Add Up.

Back when I was in the hole of tens of thousands of dollars, I still managed to save money. Was it the best decision? Probably not – if I had sent that money to my debt I could have been debt-free earlier (if, of course, I had stopped spending, which I hadn’t). But still, I am glad I did it as having some savings in the bank is always a comfortable feeling that can stop you from whipping out the credit card at the first sign of trouble. How did I manage to save money while still carrying debt and trying to pay it off?

I took 10% of every dollar I received and put it in the bank.

This was before I paid bills, paid myself, moved money into retirement funds, etc – I took a clean 10% off the top of every single dollar that passed through my hands – and put it in a savings account. You would be surprised how quickly 10% of everything you ever touch can add up! Still to this day, even after my credit card debt has been paid off, after putting money aside for retirement (not as much as I should by some standards, but I still do it – I also believe in living my life), after taking 25-30% out of each check I get to pay my taxes (the life of a freelancer!) and after putting as much as I can towards the new house fund, I still do my best to put 10% of every dollar into our general fund.

Saving money frees you from having to worry about money.

When you have savings, you don’t have to worry about a flat tire. You don’t have to worry about replacing your broken air conditioner. You don’t have to worry if you kid gets a cold and needs to go to the doctor. It doesn’t have to be a ton of money in order to make you feel a little more comfortable – just having even $1,000 set aside for emergencies can help you sleep better at night. 10% is not much, and chances are that you won’t even miss it once you get into the habit of setting it aside. To help you save 10% of every dollar that crosses your path, try these ideas:

  • If paid in cash, immediately take 10% of the total amount, put it in an envelope, and set it aside to be deposited in the bank. Putting all the cash in your wallet guarantees that you will spend it all before you can save any of it!
  • If paid by check, deposit the check inside the bank to your checking account, and if you have enough already in there, have the teller transfer 10% of the check amount over to your savings. Alternatively, if you deposit it in the ATM, don’t be so quick to press Exit after the check goes in. When the machine asks if you want to do another transaction, make sure you say YES and then do a transfer of 10% of the amount from your checking to your savings.
  • If you are receiving money by direct deposit to your bank account, make sure you watch for when each deposit clears and immediately take 10% of the amount and put it in savings. This also helps you keep an eye on when and how much money is being deposited directly, which is sometimes hard to monitor if you are not paying close attention.
  • For payments received through a service like Paypal, I always immediately transfer 10% of each deposit to a savings account outside of Paypal. For the rest of the balance, I either pay myself to my checking account, or send it to my housing fund or my taxes fund at ING.


The key to saving money is to make it so you don’t notice it happening. Getting into the habit of immediately putting aside 10% can really add up to some serious savings, and after a bit you won’t even notice the “missing” money. But it sure will come in handy should you need it; being able to pay cash rather than using a credit card is a very freeing feeling!

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Comments (18)

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  1. Matt says:

    Great advice – for a while I had money going out of my account automatically into a mutual fund. Having that emergency fund is great because life will throw you those occasional curve balls and not having to rely on a credit card is a great feeling.

  2. Braunn says:

    Re: Direct Deposit

    Most employers (though not all) will actually let you split your deposit among more than one account. You can usually specify a set percentage (10%) or dollar amount ($50) to go to one account (savings, for example) with the remainder, or “net”, to go to another (say, primary checking). In some cases, you may even be able to split it further. My current employer allows up to 3 separate accounts, which can also include investment accounts such as Scottrade.

    Being able to set this up makes the saving process even more automatic as you don’t even need to remember to make the transfers yourself. And the less you have to think about it, the less likely you are to even notice it “missing” or be tempted to dip into it unnecessarily.

    ~B

  3. Double says:

    Saving 10% of all earnings is a goal that I have tried to achieve and have been more than sucessful at that goal. The trick is to pay yourself first, either by automatic deductions at work or automatic deductions from your bank account.

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  12. SavingDiva says:

    I’ve just recently started getting serious about my savings….thanks for the tips!

  13. Gord says:

    I’ve taken a different path. The first 10% is for charity, the second 10% is for investing, the third 10% is for saving. I’ve learned to live on 70% of my income. It took 2 years to get to this point and the results are marvelous.

  14. David says:

    That’s great Gord, not everyone can pull that off. Wish we could!

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  17. [...] Following The Rule Of 10% Is Easy And The Savings Add Up. Back when I was in the hole of tens of thousands of dollars, I still managed to save money. Was it the best decision? Probably not – if I had sent that money to my debt I could have been debt-free earlier (if, of course, I had stopped spending, which…… [...]

  18. Ed DeJoliet says:

    Getting and keeping one’s financial house in order has to be a very high priority in these troubled financial times. More and more financial institutions are rethinking their lending standards, affecting both personal and business lending. Having been broke and well-off, saving 10% is a critical goal to achieve.

    I’m looking to do that and better in 2010.

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