How to save money? The solution to this problem and that’s to split up your savings accounts by the different goals that you’re trying to save for and one of these accounts should be your emergency savings account. And this account is essentially your backup plan. It is the account where you put money in the event of the unexpected your car breaks down, you lose your job, your water heater breaks,or you have an unexpected bill in the mail. It basically allows you to address that situation to have the finances to deal with that situation without taking you off paths with your other savings goals.
Make Saving Goals
Putting up your savings goals allows you to have individual focus on the different things you’re trying to save for. So some tips to help you be successful with splitting up your savings goals are:
- You want to get those emergency savingsaccounts in place. So that if something unplanned happens you don’t have to tap into your other savings accounts.
- You want to make sure that you have a priority. You know what you need to accomplish first. So, number one for example would be your emergency savings maybe, number two could be saving for a house or a car, and then you essentially want to prioritize your savings. So, as the money comes in, you know exactly where you’re going to be saving money first.
- You want to build these different savings goals into your budget. You need to have a line item for each of them in your budget indicating how much is going to allocate each month to these saving categories.In that way, if something unexpected happens, you have your emergency funds that happen to or if you’re trying to save to buy a house, you know that you have this specific account that is prioritized on your list of savings goals. It is built into your budget that is for the sole purpose of purchasing your house and for the down payment.
So, those are my tips on how to be successful with saving and to avoid having to keep falling off paths with your savings goals. As a follow-up question, I usually get asked. Where do I save this money?My answer is typically it depends on you, depends on your level of discipline.
Some people have different savings accounts for their different goals in one bank. Some people have them split across different banks that way. They’re not tempted to spend the money if it’s connected to one checking account. I wouldn’t recommend having a checkbook or debit card if you’re really trying to save and you struggle with tapping into your savings accounts.
I personally have my main savings account for my priority one goal at my regular traditional bank.But it really depends on you and what you like, when you’re saving money, do you find yourself tapping into your savings account all the time, and then maybe you want to split them across different fans? But again, like, I said you need to make sure that you’re splitting your goals into different accounts. You’re not mixing and matching, mixing, and blending the funds. Otherwise, it can get really confusing and really hard to save.