While updating my monthly net worth, I was delighted to see that my TSP (Government employee 401(k) program, for those of you new to the blog) had grown a surprising amount. Now, if you’ve been following the news, you know that July was an excellent month in terms of the market, so it’s no surprise that my retirement account grew. In addition, I’m still contributing 7%, with a 5% match (with the goal of contributing 10% next year).
So I shouldn’t be surprised that my TSP hit a small financial milestone this month. In fact, I shouldn’t pay it much attention at all, since even with contributions, it might drop in August. Plus it’s not like I’m going to need or be able to access these funds anytime soon.
But the important thing here? The contributions have been painless. Sure, my take-home pay could be more. But I don’t think about it. I see that deposit in my bank account every two weeks and I don’t think about what happened to the money before it got there. I don’t think about taxes or health insurance, because those things are not optional. Somehow, planning for retirement has also landed in that “things that are not optional” category. It’s just something that I have to do.
Set it and forget it. And watch your savings grow. It’s something you hear personal finance gurus say all the time. Have money taken from your paycheck and put into a savings account or into retirement. That way, you don’t have to think about it, and it’s harder to second guess those decisions or borrrow from yourself.
I have always prided myself on knowing where my money goes, so the fact that my retirement accounts are growing so much does surprise me a bit. But I guess when I do think about it, it’s not big picture. It’s $X every paycheck, and that’s okay, because in the end, the result is exactly what it should be.
So if you’ve been looking for a way to save, either for a big purchase or for the ultimate purchase – retirement, then maybe try this trick. It’s something I should have figured out long ago, but it was just this weekend that I realized just how well the trick worked on me.
Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.