Yep, You Need Another Bucket

Okay, well maybe not an actual bucket.  How about another savings account?  

When it comes to handling their personal money, most people have a checking account and a savings account.  That is all well and good.  BUT, you need one more savings account for your personal money.  You need to separate out the long term savings from the short term.  

Here’s the deal.  Long term savings is just that: long term.  It’s for vacations, retirement, kids’ college, buying a house, those sorts of things.  And yes, you may have more than one Long term savings account if you have an IRA, 401k and other savings.  Great! All that is good: keep it up.

Now what about short term savings?  What is that anyway?  It’s primarily two things.  It’s for the short fall.  You know, the rent is due and that check that will cover it hasn’t come in yet.  It’s for saving for property taxes and other events that don’t happen on a monthly basis.  Those puppies sneak up on us, don’t they?  It’s also for the emergency money.  The money when the well dries up, and yet you have to eat.  Most Financial Guru’s suggest 3 – 6 months of back up money for emergencies.  This is for the basics, your food, shelter, health.  And it’s a very good idea.

Can’t you just keep all that in the same savings account?  Nope, not a good idea.  It leads to a bad spot in your psyche.  If it’s all in one place, then every time you use some it gives your brain the impression that you “can’t save money”. We don’t want that.  We want you to be able to handle the day-to-day stuff AND to save for the bigger dreams and life plans.   So, open another savings account.  Call it what you will: short term savings, the “oh no, I need it now” fund, the float.  I suggest something on the quirky side.  Fund this account as you can while you continue to fund the Long term one. 

Set yourself up to succeed with money.  

For more info about being clever with money check out my next teleclass, Charge What You Are Worth.  Click here to register.