Jump Start Your Savings
Back in April, I wrote an article about Jump Starting Your Frugality, and it has seemingly been well received. Now we are going to approach this from another angle: Savings!
Getting your savings in order is a tricky thing…It’s just enough ‘out of sight, out of mind’ that you can easily dismiss it throughout the day and go to sleep at night thinking, “I need to start tomorrow.” Then tomorrow comes and its the whole cycle over again. Over and over again. One of the things that causes me anxiety is the idea that I will wake up one day, and it will be time to stop working for a paycheck and I will have nothing. Maybe not nothing, but not enough to fully enjoy the remaining years of my life. Its a scary thing, but setting up more and more financial vehicles now while there is still time gives me hope. The hardest part is getting started. Here are a few ideas:
Set goals. Duh. This is an easy one. But to elaborate a little bit, don’t just set goals, keep them. Make a list and order it from small to grand. The smaller goals can be anything really, like telling yourself that you will pack a lunch instead of heading out to your favorite hot sandwich spot and record how much you would have spent as well as what you have saved. Give yourself one week to do this and see what happens. The achievement will be a great boost towards your next goal. Your larger goals might be something more long term like some sort of time frame to have your mortgage paid off. This will need its own set of goals of course, so set up another list for that. Start small so these objectives are attainable and keep moving forward.
The other important thing is to talk to your spouse about what you both want and build the list together. Its sounds dorky but my girlfriend and I do this almost weekly. We used to have long drawn out conversations about it as we have a great deal to map out but now that we are clear with each other, these conversations are much more brief and specifically to the point.
Create a cushion. Here is where the saving begins. Imagine a layoff or some sort of large emergency. I recently had one and if my buddy hadn’t happened to have a travel voucher on hand I would be out $1300 for a next available flight. I am grateful to both him and Southwest. But it made me think: Thats not going to happen every time. I need to be ready for anything and be able to take care of myself. To get this done, set up a recurring money transfer to a savings account that is devoted to be used only when absolutely necessary. You will have to make a few sacrifices but not much. And it will be much more worth it in the long run. Set this goal to be at least 3 months of salary and try to achieve s good chunk of change equally 6 months worth. I recommend ING Direct, their rates are competitive and when the economy starts to turn for the better (next year? year after?) their rates should be the first to go up.
Pay your bills automatically. We have talked about online bill pay before and while its not the most monumental idea in finance, its still pretty powerful. Usually what happens is that you think about paying your bills and something comes up and you put it off. You have the money for it and everything but sometimes it takes a late fee to smack you upside the head to square it away. Just set up bill pay and save money by not getting a late fee. Your credit score will thank you for it.
Whats your 401(k) doing? This may seem dry to some but read it anyway…its quick and easy and you really only need to do it once. If your company has a 401(k) (or a 403(b)) talk to whoever sets it up and takes your order to set it as index funds. Three to be exact. One domestic, one foreign and one bond. This doesn’t have to stay this way and I am sure there are thousands of suggestions as to what it should be but until you are ready to analyze and make informed decisions, this is probably the safest way to go for now. Take a look at all of what Vanguard has to offer while you are at it. Feel free to comment about other ideas though!
Automate again. See a pattern? What you did for your emergency savings as well as your work fund, do this with a Roth IRA and a 529, if you have kids. Or maybe even if you don’t have kids but you might someday. These don’t have to be extreme values that cause you to live like a monk but it should be something significant. Don’t Dump so much money that you can’t live, but then again, $5 a month is not going to work very well for you either. Moderation. There is a good quote about moderation that I can’t remember now…
Paper (money) or plastic (card)? Whittle your credit card debt down to one card. Don’t cancel the rest as your credit score might take a hit but get them to zero. You now have one bill to look at and keep track of. Use the card with the lowest rate the most and try to lower all of them by calling.
Challenge yourself to try these. See what you can achieve. And then don’t worry so much about it. Remember that if you slip up, gather yourself up and keep moving forward. There is nothing gained by worrying about the past.
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Comments
@ Blake: Thanks. Its so common for us to talk about that I think we would feel weird if we didn’t. Money can definitely cause issues in a relationship if not addressed honestly. Such a sensitive part of a partnership business or emotional should be handled as openly as possible. We are not quite married but I know that when we are we will be even better off after working so closely together through our finances.
Haha, shes also a faithful reader here so we also talk about my spelling habits!
wonderful article…all common sense, but wonderful nonetheless 
you know…HSBC online offers a bit better of an APY than ING Direct (only by .5%, but it’s still higher lol). I actually have both open (because I wanted the free $25 from ING haha).
I really like your mention about you and your girlfriend’s discussions about goals and where you are heading. I believe finances are the biggest cause for divorce in the US, and it doesn’t surprise me at all. It’s a touchy and hugely important subject, but most couples aren’t even on the same page!