Talking about saving money is an every day occurrence here at Atlanta Bargain Hunter. We find ways to save on entertainment. We save for college, find ways to save by spending less and we save for rainy days.
How often, though, do we talk about saving money with the intent to spend it?
It’s an important part of savings strategy. Every year, you likely have major expenses that you pay only once or twice a year. Car registration, taxes, insurance, vacation and holiday shopping are classic examples. Let’s say you had an annual expense of $500. You likely don’t think about it until the bill comes. However, if you’d saved a little each month, you could easily make the payment without sweating it.
I’m reminded of those commercials: “This can be yours with three easy payments of $39.95.”
This is saving money that is meant to be spent, rather than retirement money or even an emergency fund. How do you do it? Kiplinger.com offered some fantastic steps to making this happen.
1. Identify what those annual or bi-annual expenses are.
2. Total the amount and divide it by 12.
3. Open an account earmarked for this purpose alone. Consider an online account with a higher yield than a bank savings account. This is even easier since you won’t be withdrawing the money regularly.
4. Kiplinger.com recommends opening a separate account for each of the bills you’ve identified. While this may work for some, it may be too difficult for some people to keep up with. I’d advise utilizing the approach that best suits you.
5. Leave the money alone until you need it. Another benefit of breaking the money up into chunks is that it makes it easier for you to identify other ways you can come up with the $30 or $40 you’ll put into that savings account for the absolute necessities. For instance, can you cut back on your cable service, reduce your cell phone plan or use public transportation part of the week and put that same money toward your insurance premium instead?
Read the full Kiplinger post to get a more detailed picture of saving to spend.
How many different savings accounts do you have? Do you use them for specific purposes? Do you plan for major expenses that only come once or twice a year, or do they catch you off-guard?
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