When You Get Money, Get Rid of It| brokeGIRLrich
Ok guys, this is my biggest savings fund tip of them all.
When you get money, get rid of it. Especially when it’s more difficult to get the money.
I don’t mean go buy some fishing gear or six pairs of Tieks that look adorable but will destroy your feet. I mean hide it away somewhere other than your checking account.
I’ll level with you. I am a bad budgeter. When I really need to get things sorted, I might go back to budgeting for a little while, but as long as I’m not wildly underwater, I’m more likely to have an idea of what’s in my checking account and spend accordingly.
So part of my trick is that when my paycheck hits my bank account, it almost immediately gets parceled out to other spots.
Some money goes into a savings account I use to pay my rent each month.
I pay off my credit card balance.
And then, I try to get rid of as much as possible. I transfer some out to my IRA. Gone.
I transfer some to my car insurance savings account. Gone.
I transfer some to my down payment savings account. Gone.
I add a little to my emergency savings account. Gone.
I check the new checking account balance, brace myself a little, and think, can I possibly squeeze out a little more to my IRA or one of my savings goals? And the answer is usually yes.
Now my checking account looks a little sad. But a sad amount, that’s still kind of padded, that I can live with for the week. When I buy my groceries, I think, oh, there’s plenty in there, let’s splurge on some Halo Top or I hit up takeout too many times and I should probably only buy the necessities.
And in the long run, my net worth is still growing like woah, because I live like I don’t have a ton of money (because I don’t in my checking account), but my savings and investment accounts are still slowly growing over time.
The best part is that this scales just fine. Did I kill it with brokeGIRLrich income and working extra shifts at my part time job? Awesome – all of my savings goals are probably a little ahead now and I totally picked up Halo Top whenever the heck I wanted it this week. But I still keep that being careful mindset by immediately moving the bulk of what I make out of my checking account.
You’d also be surprised how little bits add up. Sometimes I have goal amounts I try to meet – like putting away $100 a month towards a certain savings goal. With those little extra payments, every fourth or fifth month, I suddenly find I’m ahead an extra $100 dollars and that’s an awesome feeling.
It’s a way more awesome feeling than a new t-shirt or an extra fancy cocktail would’ve been if I’d just left those little bits in my checking account.
There is no doing it later with savings. For me, that means it’ll get spent. If I think, “I’ll transfer over X amount at the end of the week,” I probably won’t. But if I transfer out the money immediately, it’s just gone. I’m gonna think of it as gone. I’m probably not going to ever go through the bother of siphoning back out $20-30 from a savings account to splurge a little through the week. My mind just writes off the money when it’s out of the checking account.
So as soon as my paycheck clears my checking account, I do everything I can to get rid of as much as I can and for me, it’s been working out to some decent net worth growth over the last few years and the ability to weather a few unpleasant financial storms.
As soon as my pay hits my account I
Sylvia @Professional Girl on the Go recently posted…How to Pack Smart and Travel Light
As soon as my pay hits my account, I transfer everything besides rent and bills out of that account. I hate waiting to transfer money because I end up spending it or I will be charged a maintenance fee by my bank.
Sylvia @Professional Girl on the Go recently posted…How to Pack Smart and Travel Light
Absolutely – money that sits in my checking account feels like fair game for spending. Once it’s out of sight, it’s really out of mind for me.
Great advice and something that I personally live by. I see a lot of people riddled in debt that spend money on purchases they don’t need – like days out, when they get paid. That isn’t the best way to spend your money as the debts will start to snowball. Its best to try and pay off as much of your debts as possible every time you get paid. Especially prize money – people will buy things they want with it when it is best to be used to get ahead of repayments.
It’s true – it’s easier to set aside prizes or gifts for responsible choices by just getting rid of them quickly! It’ll usually make you happier in the long run (though, of course, a little balance in life ain’t a bad thing either!).
I changed over my account in the early spring to have most go into savings, instead of checking, and the bare minimum for my budget into checking. I can pull from savings when needed (pesky dentist bills), but it’s sitting in a higher interest account for the month, instead of waiting to see what’s left over.
Great advice!
Fantastic wisdom. Literally recommended the same to someone yesterday: this is a great way to do things if you struggle with spending or staying on your budget. Once it’s gone, you have to! And you will – and get better at the discipline of living within your means, too.
Mr. FWP recently posted…Why We Gave Away $2,500 Today, And Challenge Fellow Bloggers
I like this 🙂 Our strategy is basically this right now, but it’ll be different in the future when we merge our accounts finally…at that point we’ll just deposit everything directly into Savings, and then set up a “paycheck” for us into our checking account to spend however we want. We’ve got a budget, and we’ll stick to it, but we won’t be overly obsessed with tracking every cent.
We’ll have a bit of a buffer, but each month we will know what we have to spend.
The rest will be auto-transferred out of savings into other targeted things, similar to what you’ve got 🙂 Love it!
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This is a GREAT method too. If I have too much in my chequings unaccounted for I go crazy buying clothes I don’t need and way too many doughnuts.
Just started using YNAB and now I’m allocating everything….so exciting!!
Oh gosh, donuts are one of my favorite foods – I feel you!
Whenever I set up my budget at the start of the month in my HomeBudget app, I set it up like I’ve already spent the money on my fixed expenses and my savings goals for the month. Because of this, I begin the month in the negative which mentally makes me not wanna spend any money until that number starts climbing towards the positive end. The end of the month is the fun part for me because by then, I would’ve already paid for my fixed expenses and because of my penny-pinching at the beginning of the month, I usually have a good cushion towards the end of the month that I can play with!
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That’s awesome! I love that mentality!
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I do this too! Sometimes though I do it too much and it makes me feel like I have no money. I think, oh I could never afford a car, how do other people do it, when I’ve got the purchase price of a car in some savings account somewhere. Overall a good way to start with managing your money!
LOL. I totally think things like that too.
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