Set It and Forget It: Not Just For Cooking Chickens Anymore
We’ve all seen that infomercial with the countertop oven, ‘Set it and forget it!”. While I can’t speak for the product, the tagline definitely has some merit to it. Setting things up to happen so that you don’t have to do much active work can make you life a lot easier.
We all like to think we’re perfect, but that probably isn’t totally realistic, being human and all. If you’re like me, you probably have the best of intentions to save diligently every month and put money away for a rainy day, a home downpayment, or whatever else you are saving for. Sometimes those good intentions get overcome by more flashy things we’d all rather spend our money on. But making good financial choices today can have a huge impact on your financial picture down the road, so it’s important to set yourself up for success today.
A strategy I have used and found extremely useful in capping my monthly spending is to set up my paycheck so that it automatically goes to multiple accounts each month. I have one bank account that I use for my monthly expenses, and one that is for savings. I set my direct deposit up with my employer so that a specific portion of my paycheck goes into my monthly expenses account each month and the rest goes into savings.
By setting these automatic deposits up this way, it preempts the possibility that I just decide not to transfer money into savings one month (or every month), or that I transfer whatever is left over at the end of the month, if there is anything left over. It also makes it so that I don’t have to do the mental math every time I look at my account to figure out how much I have left after the amount I plan to put into savings gets deducted.
This way, when I am confronted with an unexpected expense, particularly one that I don’t want to pass up, I can look at my monthly expenses account and see if it’s something that will fit into my budget this month. It might be that I can afford it, but it means spending less on other typical budgeted items. Or it might be that it’s too large of an expense, or it’s the second or third time something ‘special’ has come up this month and I’ve already cut corners on all my standard expenses as much as I can.
If it doesn’t fit into the budget, I have two choices: I can opt to pass up (or delay, if that’s possible) the expense, or I can pull the money from savings to do it. In cases where I want to pull from savings, the actual process of moving the money will often stop me, because when it’s already in a separate account, it changes the way I think about that money mentally, and I hesitate to spend money that I think in my brain should be savings.
I’m not saying I have never pulled money from savings to do something fun or special, (I promise you, I have) but it forces me to really think about whether the expense is worth the hit to my savings.
If you are someone who is prone to giving in to temptation and would transfer readily between accounts, you can also set up the accounts at different banks so that it takes a couple of days for the transfer to actually go through, removing the opportunity for that impulse purchase.