photo credit: Ken Wilcox.
Saving money is in. Americans saved nearly 7% of their income in May 2009.
5 Successful Savings Strategies
1) Automate it. If you don’t see it, you won’t miss it.
2) Use a savings account at another bank. Out of sight, out of mind.
3) Plan for the unexpected. You’ll always have an unexpected bill (car repairs anyone?), or a stupid mistake (Had a parking ticket before? Me, too.).
4)All savings, and no play makes for a dull life. Saving isn’t sexy. It isn’t fun. Make sure you leave some room in your budget for fun or you’ll fail.
5) If you use it, replace it. If you need your emergency money, or your savings use it, and then focus on replacing it. No guilt, no worries, that’s what it is there for. Don’t let your inner spender talk you out of saving!
How I Make Saving Work
After months of trying to get my budget right, and planning for rare or occasional expenses (like car repairs, back to school expenses, etc), I finally hit on a solution that works for me.
I set up automatic deduction for 5% of each paycheck to go into our ING Direct Savings. Right now we only have 1 account there. It’s labeled Emergency Fund. I don’t see the money since it disappears the same day we get paid. I don’t even account for it in the budget.
Our Emergency Fund is only to be touched in case of medical emergency, job loss, or some other big deal. I’m trying to think about what else could apply, but then I started worrying, so we’ll just say it’s there if I need it and avoid a panic attack.
Next, I take a set amount from each check (different amounts due to where our bills fall) and transfer it in a high interest savings account at our credit union. That account earns 7% interest on the 1st $500. I try to keep at least $500 in that account to maximize the interest. It’s pennies, yes, but every penny counts when you’re getting out of debt.
The goal of this savings account is to ensure any one-time or rare expenses are covered even if they aren’t budgeted for. It’s my Budget Busters account.
Having that savings account in place makes it easier for me to stick to a budget and ensure that any money we spend doesn’t go on the credit card, or get spent from our emergency fund.
How do you stick to your savings plan? Are your savings automated?
Kelly
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We’re going to have to automate ours. We’re currently working on paying off debt but when that is done we’ll be automating it so we never even see that money and don’t have the temptation to spend it. Good Article!
Great idea to have a separate account for special off-budget expenses. I think those expenses are what make budgeting so difficult for people, because they’re not sure how to account for them.
Oh yes! We allocate the max to our 401ks, so that’s out of sight. I also have money go, each pay, to my mutual funds. Then, at the end of the year, if I’m eligible for a Roth contribution, I move the money from my taxable account to my roth.
And we participate in a Dependent Daycare account, which means that I have nearly $200 per pay ($5000 annually) being saved up throughout the year that I can tap into either to pay for daycare, or to move right from the account into savings.
Automated savings is awesome!
Automating our savings is what helped us to really get ahead. If we don’t see it we don’t know it’s there. I determined what we need each month and then put what was left in an ING account and a small amount into another savings account that acts much like your Budget Busters account, it’s there if we need it. But the best thing we ever did was save via direct deposit!
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