Put your money in the cookie jar?

Happy first day of March :)  Its bananas how the time always seems to fly!  Here we are in the third month of the year and if feels like just yesterday we were celebrating the new year and trying to decide what our resolutions should be.  Take a moment if you haven’t to reevaluate your goals and see how far you’ve come in these past two months.  You might be in for a sweet surprise.

Last Monday I talked about how to prepare yourself for all the things that come at you unexpectedly, big or small with an emergency fund.  If you didn’t have one, and I did not fire you up enough to start one, today is a new day.  Unless that is, you were waiting to see where to put that money, today is your lucky day.

Years ago I did the research to see what was a good fit for me and what I needed.  There were four things that I looked at to see where I was going to put my money for the emergency fund.

  1. Will the new account make more money for me than where my money is currently?  Every account has a certain APY(Annual Percentage Yield).  I had always kept my money in a passbook savings account at my local bank, until i asked this question. The APY on that account was less than 0.25%.  I remember when i would update the passbook, my interest earned would never go over 11 cents.  Now I didn’t have thousands of dollars in there, as I was always just starting, it seems.  Money always came in and out.  Part of that was its accessibility.  
  2. How accessible is the money?  I personally know how tempting it is to finally see your savings start to grow and think to yourself, hmm what if I got that jacket I really wanted.  Its on sale and I could always use the jacket…Yes I think I need that.  Ok, so maybe a jacket is not the greatest example.  My point is that there will always be something that will come up that you’ll talk yourself into thinking that its a NEED and NOT a WANT. The passbook account was super accessible.  A short walk down the street and in no time I could deduct the amount that I needed. That for me was an issue.  That is not to say that I have NO self control, but making it harder for myself to access the money meant that I had to reevaluate my thoughts.  Is that really a need or a want?  I looked for an account that was a little more work to access, but one that would get me my money in a reasonable amount of time.
  3. Is there a minimum balance? Some accounts require you to put in a minimum of $50, some more, some less. I started my emergency fund with $5.  It was what I had at the time and it was what I could live with not seeing.  As you continue to get a hold of your finances and pay things off, you can continue to raise the amount you put in there.
  4. How reputable is the bank holding your money?  It is always a good thing to ask around and research where you put your money?  Ask friends and family who they hold their accounts with, or if they know of anyone who speaks highly of their account. 

The answers to all my questions led me to open an account with ING.  However, my needs are not your needs, so I have included the names of some sites to help you along in your research.

Once you decide on the bank you’d like to open the account with, always READ THE FINE PRINT before proceeding.  You never know when you’ll read something in the fine print that will change your mind. Once you have it opened set up the account for automatic transfers. Out of site, out of mind. Remember to BE patient!
Hope this all helped.
Until next time
djrelat7

Pay To The Order Of…

Last Money Monday I talked about how its smart to sometimes hide your money…On occasion I still do for some of the smaller things that come up and I know are coming in advance.  How do you prepare yourself for all the things, big or small that come unexpectedly?  

A few years ago I was asked a series of simple questions, Do you pay all your bills on time each month?  My answer was yes.  Whatever it takes to pay the bills each month I do.  Second Job, extra hours, and side gigs like babysitting were always on the list of things to do. Do you have an Emergency Fund?  No. (In my head I was thinking umm, never heard of that.) Do you save money each month?  When I can, is how I answered that one.  If there is extra money at the end of the month I put it into my passbook savings account.  Most often there is not enough money at the end of the month to pay everything AND save.  So, you give all your money to strangers and none to yourself?  Umm, Yes, I guess I do.  What if you were to count yourself as a bill?  Huh,What do you mean? … It was after that conversation that I understood that in order to keep savings in my account, I had to put money in there on a monthly basis.  Little by little it made more sense.  I will admit in the beginning of trying to understand, it did not make sense to me.  But slowly and surely the light bulb turned on.

Pay Yourself First!  To me this was a foreign concept.  However, people are taught this at an early age.  I must have missed this class!  If you happened to not get this lesson to, do NOT worry.  You’re learning it now.  Rule of thumb is to put away 10% of every paycheck you earn.  When I heard this the first time I thought “10% is impossible”.  Had I started this when I first started working, back in 1996, then I would have been able to.  But no one explained to me then how money really works and how it would effect my future.  So in my budget I added ‘Emergency Fund’ to the list of bills, putting it at the top of the list.  Before I knew it, I had saved $500 bucks.  This is not to say that over time I had never saved as much, just that it was never in my savings account at one time.  Something always came up that would have made that money disappear. 
Bombarded with all of life’s expenses? This is why you definitely need to start an Emergency Fund ASAP.  The emergency fund is to help you in case you get this unexpected expense.  If you cannot reason with yourself to commit to one then start small. At first all I could do was put in $10 each month…then it went up to $37.  I was hesitant to start with 10 bucks a month.  How could I start to make a difference in my finances with 10 bucks?  Then I understood it was getting into the habit of savings.  Of taking money and putting it aside each month and to one day watch it grow.  Any extra money that came my way also went into the account.  The ultimate goal of your emergency fund is to have at least six months worth of income in this account.  Again that sounds like a big number but remember it is the ultimate goal.  This goal will take you years.  Like all goals you need steps to get you there.  Start off with $500 as your first goal…then $1000…then three months worth of income.  If you start today, you’re closer to that goal than if you NEVER start it at all.  I promise you that once you start seeing that money grow, the way you think about spending money will change drastically and you’ll get exciting with the peace of mind you’ll have knowing that if anything were to happen, you’ve got it covered. 

The next logical question is Where do I put that money? Stay tuned for next Monday Monday to find out…until then start it up and Be Patient!

Until Next Time
djrelat7