Are you ready for a tip? Really? Is it time for some kind of idea of something you can do to help get your financial house in order? Well I’ve got one for you today!
We all know that saving is an important key to handling your money responsibly. However, it’s one area that is really easy to flop in. We might sock away any extra money we have but somehow it ends up flitting away on some emergency the very next month. (Have you ever noticed that the emergency ends up being almost the exact amount of the savings, every time? Well that seemed to happen with us.)
The point of saving is to have money set aside for future use but there is always so much future and so little money! I was getting sick of working at filling a savings account only to empty it again that I decided to do something about it.
Here is my awe inspiring tip. Are you ready?
I opened two savings accounts.
And then I gave them inspired names.
I called one “projects savings” and the other “big savings.”
Isn’t it amazing? Shouldn’t I go and write a book and sell my secret to rake in the dough?
Okay, there may be a few more principles and things working in our favor but some of the biggest differences are the small ones. (Yes, doublespeak. Sorry.)
Here’s how this particular tip works. You have one account for unexpected or non-standard expenses. Examples would be appliance replacement, stitches, car repairs, etc. Then you have another account for BIG stuff. The only two that come to mind now are vehicle replacement or house down payment. Basically, with one you take withdrawals in the hundreds and the other, in the thousands.
If you separate the funds it’s much easier to draw the line on emergency spending. Our small savings account was named the “projects savings” because that’s what we mainly used it on. Our house needed a lot of repairs and we were always dipping into savings to fund something. The roof needed new shingles, the driveway needed new gravel, we needed a shed. Once the money was separate and we planned for such expenses, it was much easier to say, “Okay, let’s use savings, but we only have X dollars to spend right now. Should we wait until fall so we can opt for the nicer shingles?”
All the while the big savings was growing and growing without being touched and, “Holy cow, we can buy a car with that if we need one! Let’s see how much more we can get in there by the time this one dies, I want a nice one and it looks like we’ll be able to afford a nicer one!”
And then not only did the separate savings account keep us from spending it all, it also inspired us to up the savings rate!
Now this tip may not even do anything for you. Sorry, everyone is different. But I have no doubt that that one decision helped us greatly in reaching our goals. It’s because it helped us more clearly define our goals.
And THAT broad tip can do something for anybody. You have to have goals and they can’t be too loose like, “I want to save money.” Some people may be naturals at certain things (those naturally skinny people or those people who can play any song by just playing around with it on the piano for awhile) but if you find anything at all difficult or want to make any improvement you need to have goals.
We no longer have the two savings account method. We’ve moved past that. We still have our big savings but we don’t have any smaller savings anymore. All of our non-monthly expense savings are stored in our high interest checking account with all of the other spending money. But don’t worry, our goals haven’t gotten sloppy.
We now use an envelope style system of budgeting that plans and saves for all expenses including the emergency and non-traditional ones. We now have an even clearer idea of our goals.
So if you want to save more efficiently than you currently are, set some goals then do what works for you to meet those goals. Set up different accounts, set up automatic transfers, sticky note your bathroom mirror, get budgeting software (like YNAB that I use), put a jar on your dresser and stick every dollar bill leftover from the day’s spending in it. There are lots and lots of ideas. You just have to find what works for you and then do it!
P.S. If you use the link for YNAB (only a one time fee of $60) both you and I get 10% of the price. (So it’s yours for $54. What a deal!) But you can use it for free for a month. And if you’re a student you get YNAB for free so don’t hesitate at all! Just get it! It’s awesome. I promise. But then again, I’m weird.
photo credit: <a href=”https://www.flickr.com/photos/joeshlabotnik/14196349995/”>Joe Shlabotnik</a> via <a href=”http://photopin.com”>photopin</a> <a
photo credit: <a href=”https://www.flickr.com/photos/lobsterstew/344221112/”>Helga’s Lobster Stew</a> via <a href=”http://photopin.com”>photopin</a> <a href=”http://creativecommons.org/licenses/by/2.0/”>cc</a>
photo credit: <a href=”https://www.flickr.com/photos/penguincakes/4565656552/”>penguincakes</a> via <a href=”http://photopin.com”>photopin</a> <a href=”http://creativecommons.org/licenses/by-nc-sa/2.0/”>cc</a>