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.
And today we're here to talk about savings. But not just the singular savings, we're here to talk about the 6 different kinds of savings. One of the things that I certainly had a hard time with and I think many people also do is that we think of savings as a singular thing.
We keep it in 1 place and often that's in the "savings" account at our bank. Which is, of course, tied to our overdraft protection. Well, that's not really very useful when you're trying to keep savings as savings and not spend it on a monthly basis.
One of the other things is, we don't really have a structure around our savings. If it's all in one big pot, we don't have things that it is assigned to be for.
And so, one of the things that really shifted for me and I've seen shift incredibly for others is thinking about savings, not as one thing but as 6 different kinds.
The first kind, of course, most important emergency reserves. The second one is short term things that are not consistent, but predictable. Things like when your car breaks down or your cat has to go to the vet. Then there's long term things like putting a new roof on your house or saving for a car.
And then 4, 5 and 6 are separate long term savings that I've identified as 4, 5 and 6 because I think they're so important. And that is saving for a home, saving for your kids college education and then the third one is the big one, saving for retirement.
If you flip to page 47 in the book, and if you go to my website if you haven't bought the book I'm going to have up there for you page 47 so you can just take a look at it. You'll see all 6 of these areas with a list of what are these things and what's the purpose behind each one of them. How do you decide how much you should put in each one of these 6 accounts? And some suggestions about where you might keep it.
I want to give this roof as an example to show you how I work with people and how I think through where to put my savings. If I know I have to put a roof on my house sometime in the next 3 to 5 years and that roof is going to cost $15,000. Well, I need to be putting away between $300 to $500 a month, every single month to make that goal. And it better not be in an account tied to my checking.
I like to keep my reserves at Capital One 360. And this is not a sales pitch, this is really where I keep them. And here's why, Capital One lets you name every single savings account its own name. So for my roof account, I can name it something like "roof, dry roof, don't touch". Something funny to remind me when I get tempted to use all that roof money when it starts to grow, that what I really want is a dry roof. Separating out all of your savings like this, I know sounds a little bit overwhelming especially for those of you that are still struggling to put $25 aside.
And I assure you that if you go listen to my last video you'll know that I was once there. That I just couldn't put $25 a month aside. You can do it when you start practicing bit by bit. I promise. And the biggest thing you will get out of it is peace of mind for yourself and your money.
As always I don't want you to do this alone. You can join us over on our Facebook group Team Do Better. Come on in the water is warm. You can also go follow us at thefinancegym.com and join our mailing list or go like us over on Facebook and, of course, subscribe to these YouTube videos. Have a great day!
Free download of page 47 - Making Your Savings Rules