Wednesday, January 20, 2016

3 Tricks for Not Touching Your Savings



Hi! Welcome to the Finance Gym Action Plan for a Better Life with Money Video Series. My name's Stacey Powell, and I'm here to help you and your money get stronger.

Today I'm going to be teaching you how to leave your savings alone.

In the last video, I talked about how many months it would take you to build up to 3 to 6 months of reserves. 3 to 6 months of reserves is kind of the amount that financial professionals recommend that we have set aside for real emergencies, things like job losses.

Well, you build 3 months to 6 months of reserves. In the last video, I was showing how I like to think about it as climbing up a mountain. But the thing happens is that emergencies happen and you kind of slide back down that mountain when you have to dip into them.

And so what I want to teach you is how to dip into your reserves less frequently. For me, oh my gosh, what would be this constant cycle was getting money set aside and then having an emergency. My emergencies were things like a $200 vet bill or a $400 car expense.

I'm actually filming these videos with my daughter in the room who's 21, and she says "Those always seem like emergencies to me." You know what's an emergency is relative, right? Like for me, a $1,000 car repair, that shouldn't be an emergency. I have a car it's going to need repairs. I should have that money set aside and ready to roll. But if I had a $5,000 car repair, well that is an emergency.  That's a lot of money and not standard.

Those are kind of the ranges for somebody at my income level. For somebody at her income level, it's the difference between a $100 car repair and a $500 one. I would absolutely let her dip into her $500, into her reserves for a $500 repair. Cause I'm her accountability partner.

And that's the next thing that I'm going to talk about is some tools that I was taught that I teach other people to use to not get into your reserves except for true emergencies.

Tool #1 - Write out 6 other options that you have to deal with your "emergency" other than getting into your reserves.

Tool #2 - Wait a week. Let yourself sleep on it. Let yourself and your mind kind of work through deciding whether it's really an emergency or not.

Tool #3 - Call your accountability partner. Here's the way this went with me when I was going through this. I had friends I had called and whined and complained and commiserated with; it really wasn't very helpful. I did it to myself. When I started finding friends who I could call and all they would help me talk about was what the solution to the problem was, in a positive way and keep me out of that victim mode, that really changed for me, how many times I would go touch my reserves. And how hard I would try to think of other ways to solve my "emergencies".

So what I challenge you to do is create a rule of 3 for yourself. Find yourself an accountability partner who's going to support you and let them know what your rules around touching your emergency reserves are.

If you'd like support from our community, come join us over at the Facebook group, Team Do Better. And don't forget you can subscribe to these YouTube videos so you'll be sure to catch them when they come out. And you can also join our mailing list over at thefinancegym.com.

Now go out there and SAVE!

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