Spend less, save more. Earn more, still spend less. In a nutshell these are the two basic ways you’re going to get advice on how to build wealth.
Nowadays, a large majority of the way we spend money is now automated. With automatic deposits and withdrawals from our paycheck and bank account it has made it easier than ever to save more easily. No longer do people have an excuse to fall into spending too much and using the “whoops – spent too much this month and can’t afford to save again” excuse.
I’m not going to lie, it’s probably the best advice for efficiently saving. However one tactic that I use is even easier than automation: giving your savings accounts names.
The Nickname Strategy
Sitting on a couch and watching Netflix all day will give you nothing. Except maybe something to talk about with your fellow Netflixers.
Action and diligence are what make dreams a reality. Seems extremely difficult right?
But, if you have a spark of action and diligence in you I guarantee you can accomplish this one money saving task.
Knowing WHY you’re saving instead of just participating is what helps to keep you motivated.
This is why I have nicknamed each of my savings accounts to a specific purpose. It helps to remind me the purpose to why I’m putting money in these accounts.
Why Have Multiple Accounts?
To break it down, I have two checking accounts and nine different savings accounts spread across two different banks. Part of the reason for this is to chase higher interest rates on my savings.
If you are only getting .01%APY like most banks give, you’re doing it wrong. You will make absolutely nothing off this. I’ve earned over $40 just in interest on one savings account by switching. #worthit
The other reason I spread these accounts out is to simplify how I can track my spending. I know it decreases the amount of interest I can get but not putting it all together, but I find it nice to be able to glance at my travel fund and know how much I can spend on a last minute trip.
If you’re interested at all in knowing how I split these accounts up, they’re labeled as the following:
- General spending
- Personal Savings
- Emergency Fund
- Parents Emergency
- Housing income/expenses
- House Payment Buffer
- Security Deposits
I won’t go into the nitty gritty of how each account is put together, but to put it simply, all these accounts have their own specific purchase and each pay period a small portion is designated to each account after all personal retirement contributions have already been made.
The difference with bank two however is that account is solely for my first rental property. Of which for any of you interested I will also be talking about at a later time.
To think, a few years ago I had everything in one account, but with this method I found it’s easier to see your end goals grow, which keeps you motivated to save more.
I would love to hear about any special savings methods you found useful and as always…
Good Luck, Newbies