One of the largest issues I see during our one-on-one financial coaching meetings is the inability to save money.
Here are some facts about saved money:
Saving money is essential to long-term sustainability
Saving money relieves stress
Saving money allows you to take a chance
Saving money allows life to happen (job loss, disability, pay cut, injury, etc.) without going broke!
But you already knew that part. We all know that we are supposed to “save money for a rainy day.” Yet, even though we KNOW how important it is to save money, most people fail to do so.
I want to challenge YOU to take the next step!
If you have negative savings (no money plus overdrafted accounts and debt), the goal is to bring you to zero.
If you are at zero savings, the goal is to get to at least $2,500 in a beginner emergency fund.
Ways To Start:
Automatic Draft From Paycheck
Establish a savings account and have the money drafted from every single paycheck. Whether it is $25 or $250 per pay period – just SAVE! You KNOW that the car is going to break down. You KNOW that the school is going to send home a surprise expense.
By establishing this draft, it allows the money to be “out-of-sight.” When money is out-of-sight, it can be out-of-mind. This allows the account to grow without you robbing it!
Create An Escrow Account For Known, Upcoming Expenses
For those unfamiliar with an escrow account, it is a savings account that is established by a mortgage company. The mortgage company totals the annual cost of property taxes and homeowner’s insurance and divides it by the number of payments being made each year. The mortgage company then pays for the taxes and insurance from this escrow (savings) account. For example, if the property taxes are $1,200/year and the insurance is $600, then the total amount needed each year is $1,800. The mortgage company will collect $150 extra with each monthly payment to place into the escrow account.
An escrow account smooths out the cost over a year – instead of having to pay for it all in one month. It tightens the monthly budget, but having a fully funded escrow account sure is AWESOME when vacation arrives and the money has already been saved to pay cash for it! Those who have a mortgage with an escrow account will testify to the fact that they never worry about paying for the taxes and insurance – ask someone!
Take the next step and start saving today!