The Art of An Investment Plan – Part 4
How can we save money for the here and now?
We had one goal and that was to establish savings outside of a 401K retirement plan and life insurance. You see, you can’t use either of these easily if you need money in hand right now. In fact life insurance will never be yours as long as you’re alive. So what then can I do, we do, for short-term (here & now) savings?
Always start with what you often hear me say, create a plan. You need “a why” behind “what” you wish to achieve. Here are 6 of our “why’s” and “the what’s” that go along with them.
Why #1: We wanted to see if money would double in 10 years.
Shortly after college, I decided to put this money doubling principle to the test. I put $500 into an IRA. I thought that my money doubling over several years meant the money would go from 500 to like $50,000. I didn’t think of it as 500 going to 1000. After 10 years the money did double, but it’s far smaller than what I anticipated, $1000 or so. Nonetheless, “the why” that drove this short-term savings was to see if the money would double and gave me the drive to accomplish this savings.
Why #2: We figured doing it our way wasn’t working so we decided to do it Dave Ramsey’s way. At some point, a person can get tired of not having the results they know can be possible. After numerous failed attempts to rid ourselves of debt our way, we decided to give Dave Ramsey’s 7 steps a try. The 1st was to get a $1000 emergency fund. Not for any other reason, but to put Dave Ramsey to the test, we saved this $1000. I hate to say it but Dave’s step one has a way of energizing and giving you the confidence to continue with your plan to rid yourself of debt. It was/is a game-changer. Doing this helped us keep an emergency fund locked in our personal safe for those rainy-day events.
Why #3: We needed a way to make small purchases that took more than a single paycheck to pay for and not blow the money. Pamela and I discovered the Simple Card by accident. It came to us by way of the Google Wallet card being discontinued. At any rate, the Simple Card not only replaced our Google Wallet, but gave us some additional features we take advantage of. It allows you to set goals that take a little bit (from your safe-to-spend account) over a set amount of time and it moves it over to your goal(s) for saving. Once the targeted amount is reached, you can then make the purchase. This card has become our favorite due to this single feature.
Why #4: Our daughter is eleven and we’d like to purchase a car for her when she’s sixteen. This goal is a little tougher to manage for a couple reasons: 1) it’s a large amount and 2) it’s several years away. Our plan includes not only saving for it, but putting our finances in the position to do so. Putting off the planning is what all normal people do, so we’ve decided to plan now, ahead of time. This goals helps us weigh other purchases that require years to achieve. We use our Simple card and our long term planning initiatives to get us ready for this purchase. The main purpose of this goal is not to get caught unprepared or underprepared. Each year, we get to add to, update, and make “family plan” changes to accommodate this “why #4”.
Why #5: We want to be able to place our hands on a couple hundred dollars in the event we’d like to make a spontaneous purchase. Have you ever wished you had a little cash on you and not just 20 bucks? That was me. I wanted to, like my dad, have a couple hundred dollars on hand. So here’s what we did. We started sending small checks to me from the bank. On payday, I’ll send myself a check for a small amount, cash it, and put it away. It gave me something to look forward to and helped me begin a better banking relationship and of course meet our goal.
Why #6: We wanted to be able to give when we felt lead or inspired to give to anyone at anytime. Giving as you can imagine is a big deal for us. I’m not a giver by nature, but Pamela is. So we needed a way to help me become a better giver and satisfy her need to give. This gave us the crazy idea of having an account as well as card that does nothing but give. We use it for giving only. On each payday, we place a certain amount on the card and forget about it. It also helps us to monitor and achieve our year-end giving goals as outlined in our family plan.
You need a “why” or set of “why’s.” These “why’s” will inspire you and keep you motivated to achieve your savings goals as opposed to wasting funds and spending on things that really do not matter as much as the listed “why’s.”
Today is Friday!
Building your short-term savings plan based on a list of “why’s” is critical. Why would you like to save the money? Is this “why” compelling enough for you to do it? Saving all boils down to “the why”. We have this saying and it’s true…people do what people “want to” do. Don’t save for savings sake, put a “why” behind it to ignite your “want to”.