Saving for the Future

Julia and Danny

03.10.09 5:20pm

No...I don't.  So I'm not help but I'm eager to hear from people that do!

Ashlee Macchi

03.11.09 5:45pm

Bi-weekly when we get our paychecks I have a certain amount of money deposited into one account automatically for bills and monthly expenses and than the remainder goes directly into a checking account that I use primarily as a savings account.  Since the money is directly transferred I dont have a say in how much it is, so its easy to keep it separate and not use it for other things.  I personally have a balance in my mind that I dont want to go below in that savings account so its easy to keep the money in there; if i go below it I go a bit insane and do whatever I can to get it back up to the balance that I want.  If emergencies come up, or if I HAVE TO USE some, its nice having that account as a back up, rather than using a credit card or money that is allotted for other bills. 

I would recommend having a separate account and automatically have some of your paycheck deposited into the other account.  It may be as little as 20$, or however much you can afford, but it starts to add up.  Not seeing the funds included in my other account makes if much easier to save because I dont have to manually think to myself" man i have to transfer some to savings," because its done for me.  Maybe something like this will be useful for others, but my motto is, "if you cant see it, than you cant use it." :)

Nichole Lewellyn

03.12.09 1:20pm

I have an "emergency" savings account which I dip into when the unexpected happens i.e. car repair etc... I also have a "something special" savings which is for shoes, clothes, vacations etc... During the summer, when I ride my bike to work I deposit the money normally budgeted for gasoline into my "something special" account as a reward...

I'm very disciplined about contributing to my savings accounts, they both appear as fixed line items on my budget which don't fluctuate. It wasn't until I finished college that I really felt like I could contribute to a savings account; silly girl, saving is for everyone! I don't know how I ever survived without it... I think once you become accustomed to contributing you don't really notice you have less disposable income. What a great mind trick ehh?

Erin

03.15.09 7:10pm

A couple of years ago, I read a book called "Automatic Millionaire" by David Bach. It is all about how to increase your wealth through saving.  The basic premise is that you have a savings account that automatically withdrawls an amount of money that you set, directly from your checking account each month.  This happens ideally, right after you get paid so that you don't really count the money as income.  The idea is NOT TO TOUCH this savings account, but to let it grow for years and years, hence making you a millionaire over time.  I have an account that does this, but of course, I've touched it to cover bills, so it hasn't worked for me.  BUT, with discipline, it could.

Carrie Eyman

03.18.09 11:06am

Saving is like eating your vegetables, you know you are supposed to do it, but do you really do it? If it is only a half hearted attempt, it will never work. I taught my kids to eat veggies by dipping it in ranch or making faces out of the broccoli and carrots.  You have to make it fun, before you can see the benefits. Mind games do work!! 

I have one son in college and another on the way in 2 years, and we have to put away as much of our disposable income as possible. Mind games really come in handy.  If I never see it I don’t miss it. A portion of my paycheck goes to checking to pay for household bills and groceries the rest automatically goes to savings.  I actually make more than I think I do because the direct deposit I see going in to checking is minus the amount that went into savings. I have slowing increased this amount over the last few years to make it less painful. As it has grown, I have moved it to CD’s, because it makes it more untouchable.

donspillane

03.26.09 1:21pm

The suggestion of 2 accounts is best. One for checking and the other called a wealth accumulation account or something similar is for savings. Use electronic drafting for the most convenience. Draft out your budgeted houshold and leave the rest in savings.

So how much to save? I recommend 15% of Gross Income. There are a number of reasons for this, inflation, tax changes, planned obsolesence, technological change. These all erode wealth and if you save 15%, at the end of the day, you'll have about 3% net savings at retirement. I also recommend having 50% of gross income saved in liquid accounts (CDs are good) before even thinking about retirement accounts (401K).