Do you have a plan for your money? Most don’t. Most will lump all their cash into 1 or 2 accounts and later wonder where it all disappeared to.
Money is a tool to get what we want and need, so it makes sense to set up a plan for how your money will help you achieve those goals. To do this you need to set up multiple accounts.
That’s right, multiple savings accounts for each of your goals, no matter if it’s a want or need.
This does many different things:
#1 It keeps you from buying the stuff you want on a whim
Whether it’s a new tech toy or tickets to your favorite concert, setting up an account specifically to save for that goal will keep you from spending on them when you don’t have the money.
We buy on a whim because we don’t think the opportunity will come up again for a while and also we’re in a moment of weakness because it wasn’t thought out beforehand.
Setting aside money that you know will be going to your new gadget builds your patience surprisingly and it’s exciting because you’re not saving for something “boring” like retirement, but something you’ll get your hands on in the near future.
We love challenges, but what we love more is busting down those challenges. This is one area where you get to feel that “win.”
#2 We respond to “labels”
Humans unknowingly act different when something is labeled. If we see anything that has a religious symbol on it, we will automatically treat it with respect. When we see the color red, we automatically associate it with other objects labeled red etc. If society “labels” something as good or bad. we unconsciously will react accordingly.
The same rings true here with your savings buckets.
When you label each individual bucket, you are essentially labeling each for that specific task. We will then treat each individual goal/account accordingly to how we labeled it.
This makes us less prone to just spend away. For example, my wife Sam and I have different accounts for emergency funds, future children, annual vacation, 2 personal savings we each get to save for something we want and more.
Money is then automatically filtered to each account in regular intervals and gradually will accumulate to achieving success.
How to Get Started
The problem many run into is piling all savings into 1 pot and thus we draw more out for vacation than we expected, we spent more on clothes than we wanted because the money is there! It just doesn’t have a purpose in your mind thus you think “Why not?”
Make sure when you start out that you are getting a $0 minimum balance, $0 monthly fee account. Here you aren’t looking to build savings from interest, as interest isn’t even worth accounting for as most are below 1% now. Your focus is to simply stockpile for each individual goal you set.
All our savings accounts are also online and at a different bank than our main checking. This is another wall we put up to keep focused as money being transferred across banks takes a couple business days. For this reason, we pile on to not buying on a whim as we can’t simply go online and transfer the money immediately to our checking account.
Saving doesn’t have to be dull, save for emergency but also save for things you love.
Do you have a similar system setup. How do you save?
Joe Cassandra, a personal brand equity strategist, is the Founder of the 7Minute Entrepreneur, where you will learn how to control your early career to earn more and find your adventure. You can also follow him on Twitter.