Have you ever considered why tax authorities collect a person’s estimated taxes from each month’s paycheck instead of waiting until the end of the year to collect all the taxes? Tax authorities do this for a simple and specific reason. They know that if they attempted to collect a year’s worth of taxes at the end of the year, most people wouldn’t have it. Governments know that people tend to spend the amount of money they have available to them, so they take their share up front.
The never seen, never missed game (also commonly referred to as a “Pay Yourself First” program) works in a similar way. Most people try to save money on their own by putting away the extra money they have left over at the end of the month. In theory, this seems practical, but in reality there rarely is any money left over at the end of each month. The never seen, never missed game is a system where you decide to take a percentage of each paycheck and place it into your savings before you pay any bills, go to any bars or restaurants or make any other payments.
If you are just starting, keep the amount small at first and you will likely find you don’t even miss the money. Instead of trying to save 10% – 15% of your take home pay the first month, set the goal at 1% – 2%. After a couple of months, raise the amount a percentage point and continue to do so until you reach your target percentage saving goal.
The people who are most successful utilizing this money saving game have their money immediately transferred to an investment such as a mutual fund where the money can’t be accessed as easily as a savings account. They usually direct deposit their paycheck to their savings account and then have their designated percentage automatically transferred the same day to their other investment. Since they never see the money in their daily use account, they never miss it.