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, and 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 the money 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 didn’t have enough to save.
Some months, after I’d pay our bills, there literally 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 several many years since I stopped sabotaging our savings… by simply doing these 3 things.
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 too?
In the past, we waited, hoped, and even prayed that the next tax refund, pay raise, or Christmas bonus would bring financial change to our family. Our plan was always to “start saving” AFTER each refund, raise, or bonus. 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 we kept.
We committed ourselves to building an adequate savings buffer no matter our income level, so we would never again incur new debt.
Over the years, we have continued to keep that promise!
2. We distanced ourselves from our money.
All of my past failed savings efforts included a savings account attached to a checking account.
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 from our money, we opened up two different savings accounts.
- An Emergency Fund: we linked this account to our checking so we’d be able to transfer if necessary BUT, we chose a bank that required 4 days for all transfers. That meant no more spur-of-the-moment transfers to cover a potentially bounced check.
- Non-Emergency Savings: 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. However, the credit union we chose has a limited number of branches, limited lobby hours, and very few ATMs — so we had limited access to our savings. 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 recurring transfers was relatively easy. We could configure one of our accounts online. And we had to complete a form at our credit union. The transfers were 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 significantly more money, even on a limited budget!
What savings tricks have been effective for you?
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.
Heather @ My Kansas Life says
We tried using a small credit union, but it was a little too restrictive for us. However, we found that using a cash envelope system really helps.
Lyndsay says
This sounds exactly like me…
Will be sharing the ideas to help with the hubby later.
Sounds simple enough, it just might work 😉
Thanks so much for sharing!
My Wealth Desire says
You are most welcome Lyndsay.
My Wealth Desire says
I agree on number 3. My wife’s salary is coming through her bank, then she arranged with the bank to automatically deduct a fixed amount and directly transfer it to her savings account.
We found this as one of the effective way to save money.
Kris says
Your first point is so true. I tried for years to get out of debt, and no plan ever worked – until I decided to do whatever it took. The plans all work in theory, but not without the right attitude and the right commitment. Of course, it sounds easy. But it feels great the day you commit to making your like better, and it makes it so much easier to follow through after the initial excitement wears off.
Laura @ Frugal Newlyweds says
Definitely pulling the money out of our checking helps us. We don’t always have problems saving the money (it just starts to pile in our checking because we are very frugal dinks) however it isn’t doing anything for us there. My husband and I want to “retire” early (that means I stop teaching and we just work part-time doing odd jobs). In order to do this we need to have our little dollar bills working as hard as we are now which means investing them. It has been easy for us to get nervous about investing, but it is the only way to reach our dreams. Automatically pulling the money into retirement and investing accounts has helped us get over that fear:).
Melony says
I love this post! It spoke so clearly to me! I’m the “saver” who can never seem to save anything either! Thanks for the tips. I’ll definitely be giving these some thought! 🙂
Lori says
We always have lived below our means. And we don’t charge anything that we can’t pay for immediately when the charge bill comes. No interest charges. This has blessedly worked for us.
Jessica- Mothering with Creativity says
We, too, had a savings problem for years. And you’re right, it does start with attitude. We had to finally just make a decision that it was important.
Something that I began doing about a year ago to help save for smaller things (separate from our emergency fund savings) was to create a “special items savings” envelope (we cash budget). We keep a list with it with all our wants & needs. The list has included things like a new car seat, a new mattress for our daughter, new running shoes for my husband, soccer gear for our oldest, etc. Any leftover grocery money or spending money from our other envelopes at the end of the week goes into that special savings envelope. As it grows, the most pressing items take priority. We have been able to save for a TON of needed items this past year doing this. Again, this is separate from our regular savings. We realized that we would not use our savings account for these type of purchases and that we needed something in addition to our regular savings account to help afford those things.
It’s a small thing, and sometimes at the end of the week there is nothing to contribute, but it does grow, and knowing that leftover grocery money helps me to buy xxx helps me to prioritize keeping my menu plan simple and low budget as possible.
Kimberly says
Ok that might actually work for my family! I love this idea. I find myself constantly tempted to spend our savings by justifying the expense even if it isn’t immediately necessary, especially if I see a good deal (right now, we “need” storage for the playroom, a dresser for myself-my husband has his own armoire but we share a closet that is three feet wide and EVERYTHING that’s mine has to fit in 1/2 the closet since his work clothes take up so much space). Things that shouldn’t come out of regular savings in other words.
LIz @ Wonder Woman I'm Not says
I had to laugh because we’ve used a lot of the same tactics, including ING, to save money. One additional thing that I would recommend is setting up specific saving accounts for specific things. For example, the credit union where we have our savings account (but no checking) offers a Christmas Club and Vacation Club. Setting aside specific money helps us to not raid our regular savings to pay for these items.
Laura says
Liz – This is what we do, too…well, sort of. ING Direct allows you to split your savings account into specific categories so that you can see at a glance exactly how much you have saved (automatic transfers and all!).
Jenny in UT says
My aunt always says, “It’s not how much money you make, but how you spend your money.” And in this case, “how you save money!”
Jessica @ The Abundant Wife says
I just finished reading Pocket Your Dollars last night, sitting by the fire with my husband. I especially enjoyed the section about the “I Can’t Afford It” attitude. That has been me! I also enjoyed the tidbit about buying gas on Tuesdays…I’m going to try that one!
We’ve just started using Mvelopes recently, and I really like it for budgeting and creating a spending plan. It has already helped us to save more in the two months we’ve been using it. Thanks for all the great tips Carrie!
Hi from MN says
Hi, I just found your website…
I live in the MPLS area and LOVE Carrie’s website(Pocket Your Dollars.com)!
I use it every wk and have saved a ton of money. She really does all of work for you.
Pam- MN
Thanks, to her and you for all you do.
marie says
Carrie nice to see you guest posting here! I’m waiting to read your book from the library. I’m sure there will be great tips.
denise says
Carrie your book is the next book on my “to read” pile in my bedroom!
I use automatic debits to move certain amounts of money to different savings accounts each week. One is my HSA, my husband’s HSA, and then our emergency savings, and our “annual expenses” savings account.
I use the “annual expenses” account to pay for things like tires, oil changes, workboots for my husband and other expenses that come up randomly throughout the year 🙂
Stephanie @ Mrs. Debtfighter says
Great post! Attitude plays such a big part in everything! I agree with all of your tips, if there is a will there is a way! 🙂
Jess says
Just have to share that I recently read this book and seriously loved it!!!!
Victoria says
Just finished reading Carrie’s book “Pocket Your Dollars” this week. I really enjoyed it. My husband and I use a similar system for money that we are saving for future purchases it really does work, our savings account has no ATM card, limited hours and I told them I did not want any online features. It really does make you think twice before driving across town to grab the money.