You have probably heard your entire life – the way to save is to budget.
No one likes to budget and even those with the best intentions rarely stick to their plan. It is too much work.
The Problem: With budgeting, you deposit money into your checking account. Then you spend money from one big pool. From there you are supposed to keep track of where it goes.
Very hard to do. It does not work for most.
There is an easier way.
I have two clients who are THE QUEENS of managing money. Alice and Beth. (Not their real names but they are very real people!)
Beth wants to go to Hawaii and Italy, buy a car, and purchase new living room furniture.
She set up a savings account for each goal.
With every paycheck, automatic deposits are made into each account.
- After saving enough money for new living room furniture, she will buy it.
- After saving enough money for Hawaii, she will book the trip.
- After saving enough money for Italy, she will book the trip.
Alice is the same way. She wanted a new car, trips and a new computer. Just like Beth, she established a savings account for each goal.
They also automatically save money for retirement, holiday spending and an emergency fund.
The key is to have the savings happen so that you don’t have to think about it.
Savings needs to be automatic, meaning, you do not need to think about moving money from one account to another. Set up your accounts so that money is automatically moved to savings.
After saving for everything they want or need, they spend what is left in their checking account. Credit cards are paid completely every month.
Because they plan for future expenses, these women do everything they want, have no debt and have financial peace of mind.
Their strategy works whether you are retired, working or just starting out. Share Beth’s and Alice’s tips with your kids and grandkids. Don’t forget to set up your own savings accounts!
Lessons Learned From My Friend Gail
When I was a new grad at Hahnemann Hospital in Philadelphia, I got paid twice a month, $425 every two weeks, before taxes!!
One day my new friend Gail and I were talking about money and I said. ‘Gail, I never seem to have enough money.’ She said, ‘That is because you spend it first and don’t save first’.
Gail saved the first check of every month and the last check stayed in the checking account. If she ran out of money from the checking account that was the end of spending until the next paycheck.
I immediately started doing that and the savings mounted up.
Thank you Gail.