Discovering a New Passion + A Simple Savings Strategy

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simple life

I haven’t always been passionate about personal finance. In fact, it’s really only been about a year since I’ve embarked on this journey.

My dad is very financially savvy, and has been teaching me how to properly handle money my entire life, but I never had much interest, much to his dismay.

A lot of those lessons sunk in, but my attitude was fairly dismissive since I was just working minimum wage jobs. I didn’t see much of a need to learn about saving and investing when it felt like I had no extra money. My understanding was surface level and I didn’t dive in and do my own learning.

About a year ago I got my first full-time job and these attitudes started to change. Being married and with a consistent income coming in, I figured it was time to take hold of our finances and manage them properly.

I started reading numerous blogs, stockpiling books, listening to podcasts, and learning as much as possible. The more I learned, the more I loved it.

By learning so much, I found myself wanting to pass this new-found knowledge along to other people. It came in the form of conversations with friends and coworkers, Twitter, and also writing this blog.

I am by no means an expert on personal finance, but my goal is to inspire and assist others to take hold of their finances and manage their money more effectively.

Care About Your Finances

Too many people either don’t care, or don’t know, how to manage money well. My generation is especially guilty of this. I’d like to change this, by sharing what I learn along my journey.

Personal finance doesn’t have to be difficult. The basics are very simpleit just involves taking some time to learn and actually caring about how you’re handling your money.

It’s about spending less than you earn, and trying to make that gap as large as possible. Once you create that gap, invest the difference diligently over time.

I’ve always been a “saver,” but for the longest time my idea of saving money was to not overspend, and make sure there was still money in my checking account.

Our Savings Strategy

Here’s an example of how simple personal finance can be, this is how we currently have our savings set up (we also invest into our 401k’s at work, but for this post I just want to focus on savings).

By keeping money in your checking account or savings account with a bank, you’re earning about .1% interest, while losing about 3% with inflation. This means over time your money is losing value.

I opened an online savings account at Ally Bank. They’re currently paying about 1% interest, so by simply taking 5 minutes to set up an account and transfer money over, you’re gaining significantly more interest. There are plenty of other places you can open an online savings account such as Barclays, Capital One 360, or SmartyPig.

I chose Ally for the interest rate, strong customer service, and an easy to use mobile app. I also like that they’re an online bank with no physical locations. This helped cut down the temptation to withdraw the money.

We currently have 3 different accounts at Ally, for 3 different purposes. (They’re all under the same login info, but they each have unique account and routing numbers).

1. Emergency Fund
2. Vacation Fund
3. Car Fund (mostly used for insurance/registration costs)

Once you have your account set up, automate your savings. I have set up automatic transfers to each account, so it takes no discipline on my part to have our savings grow each month. Now if an emergency happens or when that car insurance bill is due, we have the money sitting there waiting to be used.

This method is simple, yet has been so key for my wife and I in our financial situation. Currently our biggest goal is to pay off the rest of our student loans, and we accelerated that payoff process after getting our emergency fund up to a comfortable level.

It’s been huge for our peace of mind to have money to cover emergencies, and has shown us that we can set a goal and achieve it.

While it may seem obvious to people who are way past the basics, I discussed this savings strategy with three different people recently and it was helpful to them. Small steps can mean big changes in your life.

This type of savings strategy can be extremely helpful to those people who are just starting out. If you haven’t started saving money consistently yet, I would strongly advise you to put this plan into motion today.

Note that this is for short term savings goals only, for money you won’t need for 10+ years it’s much better to invest rather than let it sit in savings and generate only 1% interest.

Feel free to post any questions or feedback in the comments section below, I’d love to hear your thoughts and assist in any way I can!

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