Feel the weight of financial stress lifting off your shoulders as I, Allison, guide you through my personal financial renaissance. It's a journey from sleepless nights peppered with anxiety to a serene state of mind, all thanks to the art of saving. I unravel the rich tapestry of strategies that have seamlessly integrated savings into my life, even as I navigated the murky waters of debt.
Discover the magic of sinking funds, my ace in the hole for dealing with those unexpected, yet inevitable, expenses. We'll share stories and tips on how you can begin to weave this powerful financial tool into your own life, transforming potential disasters into mere inconveniences with the help of a well-planned budget.
Our conversation goes beyond the basics, delving into the trinity of savings. Once you've got your emergency fund buttoned up, it's time to play offense with your finances.
We'll discuss how to strike a balance between stashing cash for predictable costs with sinking funds, saving for the sunny days with aspirational funds for those life-enhancing experiences, and setting aside a few pennies for the proverbial rainy day. Learn how to enjoy guilt-free spending on the things that matter most to you and make saving second nature with the strategic deployment of automated transfers.
Wrapping up, we underscore the importance of prioritizing savings by making it a habitual action. Whether it's earmarking funds for that festive holiday season, covering annual dues, or planning for a well-deserved getaway, I break down how automating your savings can safeguard your budget from the temptation of impulse buying. We also touch on the allure of high-yield savings accounts and how they can elevate your savings game.
You Might Like:
Feel the weight of financial stress lifting off your shoulders as I, Allison, guide you through my personal financial renaissance. It's a journey from sleepless nights peppered with anxiety to a serene state of mind, all thanks to the art of saving. I unravel the rich tapestry of strategies that have seamlessly integrated savings into my life, even as I navigated the murky waters of debt.
Discover the magic of sinking funds, my ace in the hole for dealing with those unexpected, yet inevitable, expenses. We'll share stories and tips on how you can begin to weave this powerful financial tool into your own life, transforming potential disasters into mere inconveniences with the help of a well-planned budget.
Our conversation goes beyond the basics, delving into the trinity of savings. Once you've got your emergency fund buttoned up, it's time to play offense with your finances.
We'll discuss how to strike a balance between stashing cash for predictable costs with sinking funds, saving for the sunny days with aspirational funds for those life-enhancing experiences, and setting aside a few pennies for the proverbial rainy day. Learn how to enjoy guilt-free spending on the things that matter most to you and make saving second nature with the strategic deployment of automated transfers.
Wrapping up, we underscore the importance of prioritizing savings by making it a habitual action. Whether it's earmarking funds for that festive holiday season, covering annual dues, or planning for a well-deserved getaway, I break down how automating your savings can safeguard your budget from the temptation of impulse buying. We also touch on the allure of high-yield savings accounts and how they can elevate your savings game.
You Might Like:
we know Christmas will be coming, so every single month we set aside money and we save money for that holiday, and what it allows us to do is to have that peace of mind. It's convenient, it allows us to have that peace of mind and it's great because it forces us to still live on less every single month and not inflate our lifestyle. Hey, this is Allison, and welcome to the Inspire Budget podcast, where we talk all things budgeting, debt and saving money. In today's episode, we're going to explore practical strategies to make saving money a priority in your life. Now, I know that you know the importance of saving money, but so often saving money falls to the bottom of our priority list, and that includes myself.
Speaker 1:Whenever I first started budgeting and managing my money better, I honestly didn't understand why saving money was so important. It felt like something that would be a bonus, like okay, you're doing great if you are saving money, but it's not always necessary. But then I found myself on a hot summer day in Texas, standing in the lobby of a car repair shop just miles from my apartment at the time, and in that moment standing there, I wished I was anywhere, but there I felt as if I was standing just in this unfamiliar world, one I didn't quite understand how to navigate. You see, I was, in my early 20s, a full-time teacher, and I really didn't have much money in savings. And I remember sitting there, thinking in this shop. Why wasn't I more prepared for this type of situation and why hadn't I saved more money for a possible car repair? You see, I was just a year out of college and I had no idea that saving money for car repairs was the adult quote, unquote adult thing to do. I remember standing at the counter and just handing over my debit card, and minutes earlier I had transferred every penny from my tiny savings account to cover the cost of my car repairs. I now had absolutely no money in savings and I was driving a car that appeared to be falling apart.
Speaker 1:I remember laying in bed that night and financial anxiety just kept me up late. I knew that, deep down, if I was faced with another type of unexpected expense, I would not be able to cover the bill. Every credit card application I filled out had been rejected. This was back in 2009. And I could not qualify for a credit card because the recession had hit and I had no credit. I had no money, no savings and no backup plan.
Speaker 1:Now, if I had had a car repair sinking fund in place that summer day many years ago, my situation would have been more of an annoying inconvenience instead of this moment. That led to a lot of stress, anxiety and sleepless nights. Now I wish I could tell you that the stress from that day forced me to change my spending habits. I wish I could tell you that I woke up and I said things are going to be different, right, with my money. However, it wasn't until a few years later that I started using sinking funds to save money for the expected and unexpected events, like a car repair, that life can throw at you. Now I know that saving money intentionally is not the most fun thing in the world, right, like we'd all rather spend our money on something that we can add to our home or an experience we can have with friends and family. However, I will tell you that saving money intentionally really helps not necessarily with the stuff you have and the experiences you make, but it really helps our mental health, specifically any financial stress or financial anxiety you might have, and it really helps create this wonderful peace of mind when it comes to your money and if you've ever lived a life where you were living paycheck to paycheck and stressing out about money, you know just how valuable peace of mind can be. So let's talk about, step by step, how to start implementing savings into your financial routine. Even if you're paying off debt, even if you're trying to do some other things with your money, we still want to implement savings, because there's going to come a time when we need to tap into those funds.
Speaker 1:A great way to make saving money a priority in your life, and a really simple way to do this, is by adding sinking funds to your budget every single month. A sinking fund is essentially a very strategic way to set aside money for upcoming events, payments or even unexpected costs. They provide this savings solution so you're more comfortable. Whenever an expense hits, it's more of an annoyance and not an oh my goodness, what on earth am I going to do? Moment? Essentially, sinking funds can provide you with peace of mind and save your sanity. They help cover the cost of expenses that would otherwise throw you completely off budget, just like my unexpected car repair that hot summer day. They help you stay in control of your money, so you're no longer waiting around for the next expense to catch you off guard.
Speaker 1:If you feel like you're constantly putting out little fires with your money, right, you're constantly thinking, oh my gosh, I completely forgot about this birthday gift that I have to buy, or my kid has another expense that I wasn't expecting, or I need to get new tires for my car right, we all have these little things that make us very reactive with our money. And I've said this before and I will continue to say it being reactive with our money and feeling like we're constantly having things pull at us and we're having to put out little fires with money can make us very stressed. So instead, I want us to be proactive with our money, and that looks like looking ahead in advance, trying our best to anticipate these little fires before they come. Well, you can't be perfect with that, but we can do our best Setting up sinking funds and writing a budget so that when these things happen, we say, oh my gosh, I've got this. I was proactive, I knew this day would come, and so I have the money set aside for it. That's what adding sinking funds to your budget can do for you. You're essentially just saving as much or as little money you need each month to cover a specific expense, so that the moment you're faced with that expense, you have the money to cover the cost, or at least some of the cost. The best thing about this is it can keep you from going further into debt when some of these unexpected expenses arise and sometimes they're expected expenses that maybe you forgot about.
Speaker 1:I remember the first time we moved into this home we knew that come January we would have an HOA bill that comes out every year in January to the tune of, I think back then it was $1,200. It's now almost $1,500. I had completely forgotten to set aside money for that because we had just moved in. It wasn't really on my radar. I knew in the very back, deep depths of my mind. It was there but it wasn't at the forefront of my mind, and so that January it was really annoying, very frustrating, to have to take that money out of our general savings or cut back so that we could cover that HOA bill. So, moving forward, we set up a sinking fund where we set aside money every single month. That way, whenever January comes around and that bill is due, we have the $1,500 or so sitting in a separate savings account specifically for that purpose.
Speaker 1:When it comes to saving money, I highly recommend we save for three types of things First, something we know will happen. Next, something you want to happen and then something that might happen. Those are those unexpected expenses. Each type of sinking fund or savings has a purpose in your life. Now, if you're just starting out and you're like Allison I'm really just struggling to make my minimum debt payments and figure out this whole budgeting thing, that's fine. Let's add in one type of savings into your daily budget or into your monthly budget. Maybe that one type of savings is just saving for an emergency fund, because I think that is so important and should come first. But once you have a decent emergency fund, set aside at least one month of necessary expenses, if not two to three months of necessary expenses once you have that, you can start implementing some of these sinking funds into your life. Maybe you start implementing a holiday sinking fund where you're pulling out money every single month to set aside for all types of holidays, not just holidays that fall in the winter, but maybe birthdays, anniversaries, things that come up that might catch you off guard.
Speaker 1:Today's episode is brought to you by my budget to build wealth. Here's the truth. I do not believe actually, I refuse to believe that wealth is just for the rich. I believe that wealth can be built on a budget without sacrificing what you love to spend money on. I fully believe that budgeting is the quickest, most effective way for you to reach your money goals. So, whether your goal is to stop living paycheck to paycheck, pay off those student loans that have been hanging over your head, or find room in your budget every single month so that way you can start investing for your future, you're going to need a guide, a plan, to get yourself there, which is exactly what I'm sharing in my free training budget to build wealth. In this training, I'm gonna be sharing three massive mistakes that people make with their budget and their financial plan, so that way you can avoid them. I'm gonna be sharing with you the secret to freeing up more money in your budget each month so that way you can send extra money to your goals, and I'm going to be sharing with you my tried and true four step framework to budgeting your way to wealth without giving up what you love. Plus, there is a very special free gift for anyone who stays until the end. You can sign up by going to inspiredbudgetcom slash class or just click the link in my show notes. You'll be able to choose a time that works for your schedule and I'll see you there.
Speaker 1:Now, if you're sitting here thinking, allison, give me the three types of savings that I should be focusing on after I have my emergency fund taken care of. Let's spend a little bit of time on them. The first one is something that you know will happen. This is something that you understand. It is coming up. Maybe it falls on the same day every year, like your partner's birthday or your child's birthday, and you know you wanna be able to have money set aside to cover that cost so that it doesn't force you to cut way back the month of their birthday. You can set a sinking fund up for that, for holidays, for birthdays, even, like I said, those HOA dues. We do this specifically for Christmas. We know Christmas will be coming. So every single month we set aside money and we save money for that holiday and what it allows us to do is to have that piece of mind. It's convenient, it allows us to have that piece of mind and it's great because it forces us to still live on less every single month and not inflate our lifestyle.
Speaker 1:Some things that you know will happen could be holidays, birthdays, anniversaries. Home insurance if it's paid yearly and not taken out of your escrow. Car insurance a lot of car insurance is paid yearly or every six months Any extracurricular activities for your kids I know that my oldest son is in soccer and so we have a very large payment that comes due at the beginning of the year. We have to set aside money for that. Or if your child, or any children you have, are in summer camp, that can be really expensive. By setting aside money all year long, it takes the stress away from covering these types of expenses. So we have our first category, which is saving for what we know will happen. The next category is saving for what. I think this is the best one for stuff we want to happen, like family vacations. Summer camp for our kids could fall in this. Home updates If you want to be able to update part of your home and you know you've been really thinking about this and dreaming about it you can intentionally set aside money in savings for this. Maybe landscaping updates, a new car or new furniture. Like I said, this is my favorite type of extra savings because these are the things that truly bring me so much joy.
Speaker 1:One example of a savings account we have specifically for what we want to happen is we have a vacation fund. Every single month, we put away a little bit of money into this vacation fund because we want to be able to have at least part of our vacation budget covered by the time we are taking our summer vacations as a family. When you're able to save for expenses that you want to happen in advance, you are actively taking control of your future and not letting your finances stand in the way of a life you want to live. You'll have zero guilt or regrets when you can pay for what you want in cash, meaning you're not having to go into debt to cover it. This is what it's all about for me being able to live a life you love. This is what happens when we set aside money for things that we personally value.
Speaker 1:Now, another type of savings that I want to cover are things that might happen. This is my least favorite type of savings personally, because it's kind of like that dun dun, dun moment. You know what I mean. It's something that catches you off guard or is a big surprise. You know it's gonna happen, but it's just a matter of when. For instance, if you own a car, setting aside money and some sort of car maintenance fund is a really good idea, because chances are your car is going to need to be serviced at one point and it's going to cost more than you expected. Something is going to break. These are depreciating assets, meaning they are going down in price, like our value as we drive them goes down, and they're just falling apart. So it's really important to have this type of sinking fund in place so that you don't have to go into debt when things happen. Our family personally sets aside $50 each month for car maintenance. Years ago, whenever our cars were a lot older and more prone to falling apart and having issues, we set aside more money every single month. The truth is that we can't always pinpoint when these unexpected expenses will happen, and yet when you have just some money set aside to cover the cost of these expenses, it gives you so much more confidence, peace of mind and clarity when it comes to your money.
Speaker 1:Now, the title of this episode is all about how to make saving money a priority in your life. I'm a very firm believer that if we just wish it will happen, it won't actually come true, meaning we have to actually take action. And that's why I think intentionally setting aside money every single month is really instrumental when it comes to just making saving a priority and second nature. Here's what I mean by that. Once you have your budget in place and you feel really good with where your money is going, and you know how much extra money you have left over every month, you can make saving money a priority and very easy, like you never have to think about it, by setting up automatic transfers from your checking account every single month. This is exactly what we do for the year 2024, when this podcast comes out. We have an automatic transfer of $400 each month that leaves our checking account about five days after we get paid. I like there to be a little bit of buffer room, because I want to make sure we have that money in our account, so that $400 leaves our account and it goes to a separate savings account and it is split up between three different areas.
Speaker 1:Some of the money, a percentage of it, goes into our Christmas fund, so that when December comes around, we are not stressing out about how we are going to pay for gifts. And let me tell you one thing I've learned as a parent is that as your kids get older, the gifts get smaller, yet much more expensive, much more expensive. That's something that really caught me off guard. So we have that set up. A portion of it goes to Christmas, a portion of it goes to our HOA dues. Like I said, we pay right under $1,500 a year for our HOA dues and I don't want that just coming out of my savings account, out of my emergency fund, because then I suddenly feel the pressure to refill that as fast as I can. It causes me stress, so I'd rather just have it come out every single month. And then another portion of that actually goes to our vacation fund. It's not a lot that goes into our vacation fund, but I also take some of my bonuses that I receive from my job and I'm my own business owner. I'm my own boss, so I get to choose how I receive my bonuses, which is pretty amazing. I'll take some of my bonuses and I'll add those into vacation as well, throughout the year.
Speaker 1:By setting up these automatic transfers, I never have to have the will and discipline to actually go in and move that money, meaning if I have to go in and manually move that money, chances are I'm going to talk myself out of it. I don't know about you, but when it comes to intentionally taking money out of my checking account and putting it away for somewhere else, I can find so many other things that I think that money should be used on or spent on Time. So by setting this up to be happening automatic, I remove that barrier. And let's be clear, that barrier is me. I am the problem. I am the barrier here. By removing me from the equation, I am making saving money. I am making saving money a priority, seamless and something that is automatic every single month, and I want you to do the same thing. So I'm all about taking action here.
Speaker 1:Let's talk about something you can do. First off, we have to have our budget in place. By having your budget set and really knowing where your money is going, it gives you a good idea of how much money you can save, instead of just choosing a random number of the amount of money you want to send in savings. Look at where your money is going and ask yourself okay, how much money do I have left over? If you have no money left over, then we have to go back and figure out can we increase our income any, or can we decrease our expenses? Once you have money left over each month, you can decide how much of this do I want to send to savings and what savings goal do I want to be working toward?
Speaker 1:Maybe your first savings goal is just setting up your emergency fund, so you decide to go in and set up an automatic transfer to your emergency fund every single month. That's my goal for you here is to at least choose one thing you want to save for and set up an automatic transfer to a separate savings account. There are so many online high yield savings accounts with great rates right now. I would find one that has no minimum balance and no monthly payment. Like you, don't owe them any money, right, we need free, free, free. There are so many of them. I know that CIT Bank is one ally bank. There are so many great options. So that is your goal.
Speaker 1:Now I want to know what you decide to do. So send me a message on Instagram, dm me at inspire budget, and I want to know that you listen to this podcast, episode 140. And I want to know the one thing that you are going to do to start making saving money a priority in your life. Maybe it is to set up those automatic transfers. Maybe it is to write a budget so you know how much money you have left over. Maybe you already are saving money, great. Tell me what your most fun savings goal is. Like which one do you look forward to saving for the most? Mine is vacations.
Speaker 1:Now, before we sign off, I love to ask a small favor. If you found value in today's episode, please take a moment to leave a rating or review on whatever podcast platform you're listening to this on. Your feedback not only helps us improve the podcast, but it also helps other people find us People just like you, so we can continue to grow our community of inspired budget listeners. I hope you enjoyed today's episode. I'll be back next week with another brand new episode. Talk then.