How To Save Money

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If you search “How To Save Money” in Google the results are terrible.  The top ranking article is all about how to save a nickel here or a dime there.  As if accumulating money in a savings account depended on not using so much electricity and line drying your clothes!  The next few paragraphs will give you a few specific tactics to use to grow your savings accounts.

But first, a paradigm shift… we always thought that saving money had something to do with willpower.  We would tell ourselves, “if we can just try not to spend so much then at the end of the month we will save whatever is left.”  Well, after trying for over 10 years we can tell you that does not work!  EVER!

Saving money must be intentional and planned. The best thing to do is plan to set aside money at a time you know you’ll have it.  That is, right after you get paid.

The next thing to do is make it happen without you.  
No more “hey honey did you put the money under the mattress yet this month?”  Set up an automatic transaction to your savings account that happens without you.

If you can’t help but spend what you try to save every month, put it just out of your reach.  Consider putting it on the “top shelf” that you can’t get to without a step stool.  It takes just one extra step to get to it so usually you won’t.  How can you do that with your savings?  Open an account at a different bank from the rest of your accounts.  You can still get to it if you really need it but it takes just one extra step to get it.  It’s that one extra step that will keep you from robbing your savings and spending it on something you’ll later regret.

(Clarification: Short term savings must always be 100% liquid and accessible.  Don’t put it in long term CD’s or think that 401(k) savings can be used in a pinch.)

Save for the unexpected things like car maintenance, medical expenses or the heater going out on the coldest day of the year (been there, bought the t-shirt!)  Think back to those things that have derailed your attempts at money management before and plan for them to happen again.

Finally, save for things you want.  A vacation, new car or new appliances are worthy goals.  But think about what you really want.  What are you willing to fight for?

-Mike Hixson

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