Create a financial map to help you navigate all of life’s big moments!
Here are some ways you can win with YOUR money by designating saving outlets. To help make your savings work a little more for you, consider a high-interest savings account. NerdWallet is one source you could explore to compare banks and interest rates.
Tip #1: Home Improvement Fund-This account is different from an Emergency Fund. I use the money in this account to pay for continuous home maintenance and minor repairs such as gardening/landscaping, home décor, and saving for home upgrades such as new appliances or remodeling. Again, this is not to be confused with money that comes out of the Emergency Fund for urgent, non-expected needs such as car trouble, HVAC repair, roof replacements, or other issues that should be dealt with as soon as possible.
How I created this fund: My wife and I had an existing money market savings account with no real purpose other than dumping money in and then pulling it out. This is now the Home Improvement Account.
Tip #2: Vacation Fund-Vacations are wonderful memory-makers, when planned for. Vacationing with no budget only works if you want to go broke. There are few worse moments than over-drafting an account while on vacation, which I was guilty of in the past. After you are out of non-mortgage debt, try sticking with vacations you can afford that have been paid for in advance. The main benefits here are the fact that blueprinting a vacation itinerary provides time to look for the best deals and creates a less stressful way to add activities/excursions by figuring out costs ahead of the trip. You will enjoy the vacation much more by knowing that the money being spent has already been set aside for the fun. Along with pre-paying for lodging, flights, etc., you can transfer any extra spending cash from the vacation account to your regular checking account before embarking. I would recommend allocating more money than you expect is needed-there will almost always be unanticipated temptations during your visit that you want to experience.
How I created this fund: I had a personal savings account that was basically play money and never accumulated more than a few hundred dollars. This became the Vacation Account. In addition to contributing a set amount each month, my wife and I add larger chunks when we receive work stipends, tax refunds, birthday gifts, etc.
Tip #3: Car Fund-Pay cash for your teenager's first vehicle. Many events in life are on the calendar and not a surprise (see the bonus tip below). If you have children under 16, you know exactly when they will be ready to drive. Rather than absurdly taking on a loan for a kid in high school, chip in a little money each month so that you can purchase their first vehicle without adding to the 1.5 TRILLION DOLLARS in American car debt. No, they won’t be driving a beamer, but you probably didn’t either when you were a teenager, and you turned out to be so amazing that you read personal finance articles in your spare time! The car fund also applies to the grown-ups in the house; if you or your spouse will need a new ride sooner than later, start saving now!
How I created this fund: My wife and I have a joint checking account which we dump all our money into once we get paid into our separate checking accounts from work. Since I was no longer using my personal checking for any specific reason, this became the Car Account.
Bonus Tip: The Gift Kitty-Most gifts are bought for set dates such as birthdays, anniversaries, etc. Since you know when these gifts are needed, budget and plan so the process is enjoyable, not burdensome. For example, this month is my wedding anniversary. You better believe I will be ready to take care of my lady. My dad’s birthday is the same week as my anniversary, my wife’s birthday is in August, you get the idea. Having a Gift Kitty can allow you to chip into an account so that you always have money ready to buy the next “required” gift. Remember also, it is the thought that counts; as with any other budget item, set an amount that is reasonable for each occasion and stick to it!
How I created this fund: Unlike the other funds detailed above, I had no other accounts to designate solely for a Gift Kitty. In this case I add extra into one of our other savings accounts and use a spreadsheet to earmark the balance within the kitty fund.
In life, there is always something that comes up to pay for. Almost all encumbrances except for true emergencies can be prepared for with discipline, organization, and designated accounts to serve as vessels for YOUR money.
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