Save more, spend less. Earn more, still spend less. Those are the two ways you’re going to get advice about how to build wealth (and to me saving includes investing — should probably make that clear upfront). When people lecture about how to save more (myself included) the number one strategy is to automate, automate, automate. For those who never heard this sermon from on high, it means you’re routing a percentage of each paycheck into savings before it even hits your checking account. Of course anyone who took Psychology 101 can tell you this technic of stashing your cash before you see it increase likelihood you actually save instead of falling into the “whoops, spent too much and can’t afford to save again this month” mentality .
It’s good advice. Perhaps the best advice when it comes to efficiently saving. But there’s one more trick that’s even easier than automation: nicknaming your savings accounts.
The nickname strategy
I’m not the kind of person who creates vision boards or believes in the power of “The Secret”. Wishing something true doesn’t work. Otherwise I could keep binge-eating Ben & Jerry’s and still have Gigi Hadid’s body. Action and diligence are what make a dream become a reality. And, I’ll acquiesce, a dash of visualization. Knowing why you’re saving instead of just participating in the action of saving keeps you motivated.
This is why I nicknamed each one of my savings accounts. The name on each account provides me with daily (yes, I check my cash on the reg) reminders why I’m stashing money away instead of routinely indulging in my desire to never have to cook.
Why I have multiple savings accounts
Instead of adhering to the K.I.S.S. (Keep it simple, stupid) mentality of personal finance – I do have three different savings accounts and two checking accounts spread across two banks. Part of the reason I keep money in multiple locations is to chase a high interest rate on my savings with accounts like Ally. If you’re only getting 0.01% APY on a savings account – then you’re doing it wrong. (I’ve earned $68.51 in interest on a single savings account from switching banks less than a year ago. #worthit)
The other reason I spread out accounts is to simplify how I can track my budgets. This might sound strange, and I recognize it decreases the interest I can earn by not putting it all in one pot, but I like being able to just glance at my travel fund and know how much I can spend on an impromptu trip.
Yes, this could all be meticulously tracked in an excel spreadsheet – but I opted for the multiple account method because it works for me. Remember, this is personal finance.
My (sort of uninspired) nicknames
I know you’re dying to know what clever monikers I attached to each of my savings account for that daily dose of motivation. I hate to disappoint, but they’re pretty run-of-the-mill names.
The O.G. of my savings accounts received the cliché name “Honey Pot”. This account serves as my emergency fund and Mosby’s stash of cash. I do actually keep an excel grid for this account because I like to track Mosby’s expenses separately.
You can blame this lackluster nickname on my bank. Apparently “Other People’s Weddings Fund” was too long a name. This fund is used to pay for all trips, which as a mid-twenty-something is primarily weddings right now. I do actually use this fund to pay for all wedding-related expense such as gifts, travel, and bridesmaid necessities like getting my hair done. It’s lovely to be able to always afford weddings without it busting my monthly budget. 25 percent of all my freelance income goes into this account because none of my regular take-home pay subsidizes my annual adventures – or other people’s weddings.
Down Payment (and paying Uncle Sam)
Usually the healthiest of my savings accounts – until tax time – this one is meant to focus on my medium-term goal of buying a house. Frankly, I have no clue when that will be, but I figure I’ll want to own some land sooner or later. I tuck away 50 percent of all freelance income into this account. This strategy helps make sure I’m prepared to cut my check to Uncle Sam and the remainder will eventually help me put 20 percent down on a house.
And to think, I didn’t have a proper savings account three years ago. (Spoiler: I kept it all in checking).
Image taken from StockSnap