On a scale of one to ten, how stressed out would you be to find out your car needed a $600 repair and it really couldn’t wait until you saved up the money?
One being no big deal.
Ten being major financial crisis.
What’s your number?
How much money is in your emergency fund?
How much money is in your regular savings?
How much money do you have in your “car fund” ?
You need to know these numbers.
If you are anything above a five with the car repair scenario and you answered “zero” or “not much” to the other three questions, you need to read this:
Get a savings plan in place and start saving – TODAY!The savings account is the #1 difference between something being a financial inconvenience vs. a financial crisis. Click To Tweet
“oh, but I’m not a saver”. Yes, you are, you just don’t know it yet.
Three Steps to Better Savings
1. Name your Savings.
Give your savings account a name: “emergency fund”, “savings for _____” fund, “car fund” for examples. When you give your savings a name, you are less tempted to spend that money on anything other than the purpose for which it was created.
2. Make it a Priority
When I teach people how to create a budget, savings is the 2nd and 3rd line items. Yes, SAVINGS comes right after tithe/giving and before anything else. It’s THAT important.
The Emergency Fund gets funded first, then savings for other things in priority order.
3. Make it Automatic
If you can set up with your bank to deduct a certain amount of savings each paycheck, set that up.
BEFORE you do this, however, make sure your budget can balance with the amount of money you want to save each paycheck. Don’t save too much and then have to transfer funds.
These are the exact steps I use and teach to create better savings.
1. Every savings account we have has a name:
Elton John Concert Fund
Misc. Savings Fund
2. We prioritize Saving based on the events we have going on from month to month
The Emergency Fund is ALWAYS number one on the list. The other funds can shift in priority order depending on the events.
For example, I’m in “Elton Concert Season” right now so that savings fund is taking priority over the other funds. (I went to NYC in October, going to Atlanta this month!)
Our investment savings is automatically deducted from our checking once a month.
Our other savings are transferred manually HOWEVER, they are done on payday, the same day I pay bills and it’s always done first. This is a habit and discipline I developed over the years.
Let’s get back to the car repair – I’ll have more information next Monday in the blog but here’s what I know for now. The repair needs to be done, it’s going to take most of the day and I’ll need to rent a car because we are NOT a one car family due to schedules.
The is NOT a financial crisis, nor is it an emergency.
Oh, but several years ago, before better money management and debt free life, this definitely would have been a crisis AND an emergency!
This falls under normal car maintenance – my car is a 2009 that I bought for cash in 2016 – so the money will come from the Car Fund. This is a fund established to purchase a new to me car with cash when the time comes to do that. Basically, I make a car payment to myself every month. It’s also there for events like this, when a major repair needs to be done.
This event is exactly why it’s important to have savings.
So if this was your scenario, is it a crisis or an inconvenience? What’s your “Scale of 1-10” number?
How about your savings funds? What’s your number?
More importantly, what are YOU going to do about the numbers if you don’t like your answer?
Today is a great day to start SAVING! #MoneyMonday
ICYMI: I’m taking part in a writing challenge during the month of November and decided to get back to blogging. I’m writing and posting everyday, Monday through Friday.
Here’s an idea of what you can expect:
Money Monday – a blog about something related to personal finance
Time Management Tuesday – Time Management tips
Writer’s Wednesday – a story with a life lesson
“Purge-day” Thursday – My journey towards minimalism and “purging”.
Free for All Friday – Have a topic you want me to write about? This is the day I will write about it!
Send me your suggestions! MelissatheCoach@gmail.com (you will remain anonymous)