Savings. It is something that we all seem to struggle with. Something that most people don’t consider to be impacting their ability to save or stick to a budget is the structure of their bank accounts. We are visual creatures and the best planned budget can still fall to the wayside if we can’t see money adding up in savings towards our goals. Breaking one or two accounts into multiple accounts helps you to put money aside and keep it there, allowing you to stay on track for reaching your financial goals and staying out of debt.
No right way
Everyone’s situation is different and no two people will have exactly the same financial needs. While there is no hard and fast rules for how to set up your accounts, we can guide you in the right direction.
- Everyday account
This account is the one you would use to temporarily house your money when you get paid. Keeping too much money in an account you have direct access to via key card makes fighting the urge to spend – digging yourself further into debt – more difficult. Keeping a little in here for smaller items, weekly groceries and planned expenditures means you won’t blow your budget.
Sit down and work out what bills must be paid, when and how much. Keeping on top of your bills means they are never paid late and improves your credit score. Storing money for bills in their own account means that you can’t spend the money needed for electricity or car registration on something else.
Once you’ve tightened the purse strings it can be hard to stay motivated when you don’t see a payoff straight away. Directing money for holidays or larger treats like a new TV to its own account makes it easy to see the reward for your hard work and stay inspired to stick to your budget.
Life is unpredictable. You never know when your car or washing machine will break down and need urgent repairs. Maintaining a buffer fund in a separate account can decrease the anxiety you feel towards finances. Knowing that you are protected and will be able to recover from unexpected financial blows will leave you less on edge.
If this buffer was only mental, it is easy to justify dipping into it. Having to physically take money out and place it into your everyday account to use decreases the likelihood you will spend it frivolously.
- Long-term savings
As much as our short-term orientated society would like to think otherwise, it is important to set aside money for the future. Set up an automatic transfer between your everyday account and long-term savings for when you get paid. You don’t miss money you never saw. Decide on a figure you can comfortably live without each pay cycle and direct it here. Ideally this would be opened in a high interest earning account.
These additional accounts should attract no maintenance fees. Many banks these days have online only accounts that you can set up from your computer and manage entirely through their online banking portals. These are a great help for those looking to restructure their accounts to assist in savings. It can be done in your own time and you can play around with them to find what best suits you without needing to visit a physical branch.
For more information about how you can reach your financial goals and become debt free, talk to the team at Life After Debt. We can consolidate your debt to make it more manageable and get you back on track financially. Call us today on 1300 237 669 or email us here.