Ok guys, this is my biggest savings fund tip of them all.
When you get money, get rid of it. Especially when it’s more difficult to get the money.
I don’t mean go buy some fishing gear or six pairs of Tieks that look adorable but will destroy your feet. I mean hide it away somewhere other than your checking account.
I’ll level with you. I am a bad budgeter. When I really need to get things sorted, I might go back to budgeting for a little while, but as long as I’m not wildly underwater, I’m more likely to have an idea of what’s in my checking account and spend accordingly.
So part of my trick is that when my paycheck hits my bank account, it almost immediately gets parceled out to other spots.
Some money goes into a savings account I use to pay my rent each month.
I pay off my credit card balance.
And then, I try to get rid of as much as possible. I transfer some out to my IRA. Gone.
I transfer some to my car insurance savings account. Gone.
I transfer some to my down payment savings account. Gone.
I add a little to my emergency savings account. Gone.
I check the new checking account balance, brace myself a little, and think, can I possibly squeeze out a little more to my IRA or one of my savings goals? And the answer is usually yes.
Now my checking account looks a little sad. But a sad amount, that’s still kind of padded, that I can live with for the week. When I buy my groceries, I think, oh, there’s plenty in there, let’s splurge on some Halo Top or I hit up takeout too many times and I should probably only buy the necessities.
And in the long run, my net worth is still growing like woah, because I live like I don’t have a ton of money (because I don’t in my checking account), but my savings and investment accounts are still slowly growing over time.
The best part is that this scales just fine. Did I kill it with brokeGIRLrich income and working extra shifts at my part time job? Awesome – all of my savings goals are probably a little ahead now and I totally picked up Halo Top whenever the heck I wanted it this week. But I still keep that being careful mindset by immediately moving the bulk of what I make out of my checking account.
You’d also be surprised how little bits add up. Sometimes I have goal amounts I try to meet – like putting away $100 a month towards a certain savings goal. With those little extra payments, every fourth or fifth month, I suddenly find I’m ahead an extra $100 dollars and that’s an awesome feeling.
It’s a way more awesome feeling than a new t-shirt or an extra fancy cocktail would’ve been if I’d just left those little bits in my checking account.
There is no doing it later with savings. For me, that means it’ll get spent. If I think, “I’ll transfer over X amount at the end of the week,” I probably won’t. But if I transfer out the money immediately, it’s just gone. I’m gonna think of it as gone. I’m probably not going to ever go through the bother of siphoning back out $20-30 from a savings account to splurge a little through the week. My mind just writes off the money when it’s out of the checking account.
So as soon as my paycheck clears my checking account, I do everything I can to get rid of as much as I can and for me, it’s been working out to some decent net worth growth over the last few years and the ability to weather a few unpleasant financial storms.