7 Paycheck Habits To Start Now That You’ll Thank Yourself For in Retirement

Retirement may feel far off, but the habits you build with every paycheck today can have a huge impact on how comfortable your future looks. Financial planners say that small, automated steps can quietly turn your income into lasting wealth.

Find Out: Here’s How to Fix Your Budgeting Problems, According to Kumiko Love

Read Next: 9 Low-Effort Ways To Make Passive Income (You Can Start This Week)

These experts described seven paycheck habits that you’ll thank yourself for in retirement.

1. Start Early

The “top habit” your future retired self will thank you for is starting early, according to Curt Scott, CFP of Scott Financial Group. “Small changes over a long period of time result in a significant difference when it comes to retirement,” he pointed out.

He specifically recommended between 10% and 15% of one’s income to be allocated toward a retirement savings account. “Then they can start planning their budget with the remaining income.”

It’s hard to think in percentages, however, so Zaccary S. Call, CFP, president of Capita Financial Network, laid out the numbers: “For words of encouragement: Remember that every $500/month you can redirect from unaware or unintentional expenses to retirement savings will create over $800,000 in 30 years at 9% growth.”

Learn More: Here’s How to Build an Emergency Fund Without Blowing Your Budget

2. Automate

No matter when you start saving, automatic transfers and direct deposits are by far the best way to consistently save, Scott said. “The money is gone before it ever hits the checking account and when something is out of sight, it is usually out of mind.”

When tight times arise, money that is not sitting in a checking account, or easy to get to, tends to stay saved.

3. Create a Fake Paycheck

Another way to trick yourself into saving, according to Call, is to create “a fake paycheck” for yourself. Here is how it works:

You set up two accounts: a funnel account and a fake paycheck account.You deposit all your income into the funnel account.You create a regular transfer to the fake paycheck account. Ideally, these are two different banking institutions to provide barriers.You fund savings and retirement from the funnel account.You spend all of the fake paycheck.

These two accounts naturally push you toward success without relying on motivation, he explained.
“With immense effort, you can fight your behavior,” Call said. Two bank accounts and the fake paycheck concept organize your cash flow management.

4. Save Any Raises

If you feel behind in saving for retirement, Scott encouraged saving all or most of any pay raises. “However, getting that pay increase can prove difficult and may require a change,” he said.
Many times, an income increase comes from a job change or gaining new skills, for example. That may require more of a plan to meet an income goal.

5. ‘Label’ Every Dollar

It is important to “label” every dollar you make and compare that to an honest budget of your needs, wants and future, Scott said. After taking care of fixed expenses and needs, you decide what to do with any additional income. He thinks the 50/30/20 rule is a good place to start, where 50% of your income goes to needs, 30% goes to wants and 20% goes to retirement planning.

6. Look Into an HSA

Many people know about the benefits of an employer matched 401(k), but a lot of people don’t understand the benefits of a health savings account (HSA) and how the taxed favored treatment of the investment can grow like any other investment vehicle, Scott pointed out.

Also, using a Roth account for the employee contributions, while the company match gets tax deferred can result in a retirement being insulated from future tax law changes and how those could affect their retirement income.

7. Avoid Lifestyle Creep

Lifestyle creep is the most common bad habit, Scott said. The more income a person or household makes, the easier it is to quietly begin to spend more money on things.

“One strategy to implement is to split any pay increase by three,” he suggested. One-third is used to account for inflation, another third is used for lifestyle increase and a final third is used for debt payoff or retirement savings.

More From GOBankingRates

5 Luxury SUVs That Will Have Massive Price Drops in Fall 2025 I Help People Retire Every Day -- Here's the Most Common Retirement Mistake People Make 6 Clever Ways to Pocket an Extra $1K This Month 6 Safe Accounts Proven to Grow Your Money Up to 13x Faster

This article originally appeared on GOBankingRates.com: 7 Paycheck Habits To Start Now That You’ll Thank Yourself For in Retirement

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.