3 Tips to Save More
Guest post from Carrie of Pocket Your Dollars
For years I couldn’t save money – not wouldn’t — but actually couldn’t. I tried. I knew it was important, I had a savings account, I wanted to save. Still, my savings balance rarely exceeded $1,000 — more typically, it hovered around $150.
Looking back, I realized the reason I continually struggled to build a nest egg was because I constantly sabotaged my saving efforts. It seemed that one of two things always happened.
1. I’d move it back-and-forth.
I’d transfer money out of the checking account, into our savings account. Then, something would come up and I’d find myself moving the money right back into the checking account. It was never anything frivolous or extravagant, but we seemed to always have a pressing need for the money.
2. I wouldn’t have enough to save.
Some months after I’d pay our bills there wouldn’t be anything left over to move into savings. Sure, we had a budget line item called “savings”, but the money we intended to save somehow disappeared during the month.
And then… I Learned How to Save!
It’s been almost seven years since I quit sabotaging our savings. We did three things to build healthy savings balances for our family.
1. We adjusted our attitude
The starting point for any lasting change is on the inside. Yes, we ultimately need to modify our behavior and habits. However, until your desired behavioral changes flow out of a new mindset, they’ll be short-lived. Isn’t that why most New Year’s Resolutions fail?
We’d waited, hoped and even prayed that the next tax refund, pay raise or Christmas bonus would bring financial change to our family. After the next increase, then we’d start to build a savings account. Then we’d have enough to be able to set something aside. We constantly pushed change into the future, always believing it was just around the corner.
Finally, in June 2006 change did come. But, it wasn’t via a cash windfall. It came because we changed our attitude. My husband and I finally realized that it doesn’t matter how much money you make. What makes the financial difference is how much money you keep. We committed ourselves to building an adequate savings buffer no matter our income level so we would never again incur new debt. We’ve kept that promise.
2. We distanced ourselves from our money
All of my failed savings efforts included a savings account attached to a checking. Dangerous. The money is so quickly and easily transferred between accounts that I viewed savings as an extension of the checking instead of something untouchable.
To distance ourselves, we opened up two different savings account. For our emergency fund we used Capitol 360 (formerly ING Direct). Our savings account is linked to our checking, enabling transfers, but transfers take up to 4 days to become available. That meant no more spur-of-the-moment transfers to cover a potentially bounced check.
We opened another savings account at a small local credit union to save for expected, non-emergency things like car repairs, medical bills and our next vacation. We intentionally chose a bank where our access to the money would be limited. The credit union has a limited number of branches, limited lobby hours and very few ATMs. We wanted to make it difficult, but not impossible, to get out money out. In fact, we didn’t even get a debit card when we opened the account, just an old-fashioned ATM card.
3. We set up an auto-transfer
Once we’d sufficiently distanced ourselves from our savings, then we needed to fund those accounts. We set up recurring auto-transfers that happened on a set day each month. Auto-transferring the deposits made a huge difference in our ability to actually save the money we intended.
Setting up the recurring transfers was relatively easy. With the online bank we configured it online. To make a monthly deposit into the credit union’s account we had to complete a form at our primary bank authorizing the ACH transfer into the credit union’s account. That transfer was unstoppable without going into a branch and signing a cancellation form.
I knew that if we didn’t have sufficient funds in the bank account then those auto-transfers would result in an overdraft charge. I didn’t want that, so I earmarked those designated amounts and made sure they were always available.
Doing these three things has enabled my family to save money. What has been effective for you to build savings, even on a limited budget?
Carrie Rocha blogs at Pocket Your Dollars. She’s also author of Pocket Your Dollars: 5 Attitude Changes That Will Help You Pay Down Debt, Avoid Financial Stress, and Keep More of What You Make (Bethany House), which helps readers make lasting financial change from the inside out. She lives in Minneapolis, MN.
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