Saving Money Tips

Saving money strategy

...for a rainy day, to go on vacation, or for retirement.

How do I start…? this is a huge challenge in the Hospitality Industry, and no one like to talk about it so here we go.

First, let’s talk about Bank accounts and what they are for.

Checking Account, this should be to pay all your standard and recurring bills. for example: home, car, groceries, all automatic charges. You should always have one and a half times your monthly bills in here at all times to a max of three months of expenses. Most of you are saying, but why? The answer is your money should be working for you, not you for your money.

High Yield Savings Account, you should look for the highest paying bank out there. I like Ally Bank or Capital One Bank for these, but that’s up to you and your preference. The way these banks work is that they pay higher interest than your local bank, so now your money is working for you just from sitting there. It is not going to make you rich or famous, but it will compound over time. I would keep my emergency funds in here, so that would be a minimum of six months of your mo did CC xxx ccnthly expenses to a max of one year of expenses.

I believe that everyone should look for a bank that has the least amount of fees for conducting business with them, because why pay them if they're using your money to make money…?

The Fun Part

I would open 3 accounts as follows:

Checking account # 1: Only for your recurring monthly expenses. Keep only a max of three months of expenses in this account. Do not put in funds that are used for dining out or entertainment.

Checking Account #2: This account is only for you to deposit your monthly FUN moneySo when you spend all of it, then stay home: no going out till next month, sorry!

High-Interest Savings Account #3: This account is your emergency money account. This is for loss of job, flat tire, unexpected medical bills, etc. Here you should keep six months to one year of expenses saved.

After doing this exercise for 1 year, then there are other places to put money to work for youuu, but you need to build the savings muscle before you try other strategies.

I have added a small drawing of what I mean and how it works via a salary of $50,000 a year on a single-person tax bracket (TEXAS). If you do this strategy you will save $6,000 a year and with 0.50% in 5 years you will have saved $30,473.00

The other important thing to remember is that if you make more money because you got a raise or the business was good, then you have to bump up all the accounts to go with your lifestyle. You should be saving anywhere from 20 to 30% of your income but if you cannot do that, start small. The whole trick is to start building the savings habit.