How to Put Away Savings (Just Like the Government Does With Your Money)

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I save my money just like the government does. You can too!

Want to know how?

Read on an you’ll see how you can put money aside just like the government. It’s a super simple way to get your savings growing and what’s great is it requires very little effort on your part.

This is a technique I’ve been using for years to keep money flowing into my savings account. Are you ready to find out the method?

How to Put Away Savings Like the Government

OK, take out your last paycheck stub and give it a good look.

What do you notice?

If you’re like me you notice that you start off with one amount that you’re mildly happy about but by the time you’ve scrolled down to the bottom you’re left with a much smaller amount. It’s shocking how your gross and net changes!

The taxes taken out of your paycheck are killer, aren’t they? The government, state and local, take out their taxes before you even have a chance to touch your money. You don’t have a say (at least not after you set up your W-4).

Do you see what what happened there on your paycheck? The government makes sure they have their money without having to ask for it. That would be too much work.

Imagine if it was up to you to give that money to the gov’t every pay period.

What do you think would happen?


Would you make sure you’d have that money put aside for the government or do you think you might “overlook it” for whatever reason and not have money leftover at the end of the month? Odds are the government would be last on your list to take money out for. That’s why they go in and grab it before you see your money. They ain’t no dummies! (Read the last sentence in your best Fred Sanford voice for affect, it’s more fun that way.)

I’m not here to argue the merits of government taxes and how they get their money.

But I want you to see how effective their method is.

It doesn’t matter how many bills you have or what you plan to do with the money. The government has their due before you get to use it.

There are a couple of concepts at play that you can use to your advantage. Let’s take a look at them.

The Power of Automating and Paying Yourself First

Automating Your Savings

saving-up-changeFirst up is automating your savings. It sounds pretty much like it is – you make your savings automatic.

When does the government take their taxes? Every time you get paid, automatically. The whole system is set up without you, or them, having to blink an eyelash about it.

Think about it.

When was the last time you worried about having to send in your taxes after you got paid? You didn’t. In fact it was super easy (outside of the shock of how much they take).

It was automatic.

The government gets their money automatically.

Do you save automatically?

The gov’t doesn’t trust you to take out the money you owe them every pay period so they have it set up automatically. But how is your personal savings set up? Do you try to put something away every month? Does it always work?

My guess is it doesn’t.

Don’t feel bad, that’s the case for most people. We’re busy and we don’t always have time to take care of every little thing. So what happens is you forget to move some money into savings. It’s normal.

But what if you made it automatic?

What if every paycheck you had money hit your savings without you having to do anything? It’s easy to do.

Did you know payroll divisions are usually able to direct deposit to more than one bank account? You can have one direct deposit go to your checking and another go to a savings account.

Another way to set up automatic savings is to set up an automatic transfer to a savings account from your bank.

This is what we do. We have a weekly transfer into our online savings account. This happens every week. The only time I ever mess with the transfer is if I’m changing the amount. Otherwise it’s all hands off. We’ve had this set up for years now and it’s a great way to make sure we always have money going into savings.

Is it the only money we put in savings? No. But I know how I am. If I left it to a manual transfer I’d either not get around to it or I’d find other uses for the money (read: I’d spend it on stuff) before I could transfer it. Ineffective.

If you want to get your savings growing consistently set up an automatic transfer.

Let’s get to the second concept now.

Pay Yourself First

Let’s get back to that paycheck, shall we?

When does the government take those taxes from you? Do they ask for a bank account so they could pull the money at the end of the month?

Heck no!

They know a good amount of people would have spent that money long before they could get to it. That’s no good. The taxes must get paid!

So the government makes sure the money is pulled when your paycheck is available but before you have access to the money. If fact it’s your employer that pulls the money out for them.

The gov’t knows if they don’t pay themselves first there’s a good chance they don’t get all of their money.

Guess what? It’s the same thing for our savings too!

Odds are if you aren’t ‘paying yourself first’ then you aren’t putting away as much as you could in savings. I know. I’m definitely like that.

When you pay yourself first you’re taking the money out before you have a chance to find another way to use it.

This is a great way to make sure your money actually gets where you want it be it savings or investing even. Without paying yourself first there’s just too much temptation to use the money elsewhere. Besides, it’s just easier when you pay yourself first.

If you are automating your savings then you’re probably already paying yourself first. Well, that is if you’re making sure the money comes out before you can spend it anywhere else.

This part doesn’t have to be automated it just makes it easier. But you can still use the concept. For any windfall you receive pay yourself first and make sure part of it gets put away into savings. Don’t count on your best intentions of putting the money away later on. If you’re anything like me, and many other people, your best intentions won’t work.

By the way, you may notice your 401(k) is a perfect example of paying yourself first, as well as automating.

My automatic savings is in CapitalOne 360. Take a look.

Final Word On Saving Like the Government

Automating and paying yourself first are simple concepts. But they are powerful ways to make sure you’re saving up as much as you can.

These work for the government and they will work for you. Go and set up an automatic transfer that will pay yourself first for your nest paycheck.

Your savings will appreciate it!

Since we’ve been talking about saving and taxes…

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This article has been sponsored by TaxACT.

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Published or updated January 16, 2015.


  1. Nice post 🙂

    Since I’m self-employed, I tend to wait until the end of the month and transfer a percentage of my earnings into savings, rather than just a set amount. A lot of the time it works, but sometimes it doesn’t.

    But since I’ve transferring to a new bank, I’m going to check out my options there to see if there’s any way to automate so I’m kind of FORCED to do it rather than motivating myself to do so – I know my future self will thank me. 🙂

  2. Makes sense and it always works! Even if you set up small amounts to transfer each week, they still add up. Automatic savings rock! Thanks for the analogy with how the government does it. I never saw it that way. Haha. Cheers.

  3. Automatic savings payments were the key for me. Direct deposit of paycheck then the transfers occur to the various savings accounts in the same day. No fuss.

  4. I get paid once a month. Since I have to deposit the check, wait for it to clear, then pay myself and wait for *that* to clear, I get nervous about automatic withdrawals.

    But once the money is safely in my account, I go over to our multitude of Capital One 360 sub-accounts and start setting up the monthly transfers. Whatever is left after that and the projected bills gets put into the main savings account.

    I think it’s a happy medium. I don’t have to worry about an automatic withdrawal putting an account into the negative, but I also make sure that we do put away money each month.

What Do You Think?