VOL. 133 | NO. 10 | Friday, January 12, 2018
Rays of Wisdom
Dana and Ray Brandon
Stash More Cash
By Ray and Dana Brandon
Ray’s Take: On the surface it seems simple. Most of us know we need to save more cash – especially to bolster an emergency fund. And yet savings are at historic lows and many are a couple of paychecks away from serious financial problems.
We believe we can just sweep that “leftover” cash from the month to our emergency fund, but somehow it’s just not there. We have had a robust economy for a good many years and many have forgotten how things go when we hit “bumps.”
Most Americans are willing to work and pay their bills, and that’s certainly a good start. The next step is to learn to “PYF.” Pay yourself first. Building more savings, like retirement accounts and college savings funds, must be treated like your mortgage and utility bills.
To save a significant amount of money, you have to make more than an intermittent effort. You have to make a lifestyle changes.
It seems simple and obvious, but writing down everything you spend is a great way to get a handle on where your money is going and spotting ways to make some changes that will open the door to more savings opportunities. Whether you do the list old-school style and write it in notebook or use an app, that visual creates a psychological cause and effect.
My bank is very old-school about one thing – they only let me spend a dollar once. Once it’s gone to my savings goal or creditor, there’s nothing left for eating out, going to Starbucks or the latest I gadget. The key is to start working backwards with the budget. Don’t start with the depravation of something, look at everything you are spending toward.
Try automating deposits from every paycheck and use only cash. You don’t spend money you don’t see in your account and by using cash instead of your debit card, you are more aware of spending.
Financial planning includes achieving long-term goals, but it’s also about making sure you have what you need in the short term too. Those dollars will add up much more quickly than you think.
Dana’s Take: My debit card cracked in early December and I had to order a replacement card. Due to mix-ups, I had to go without a debit card until Dec. 23. As a result, my holiday shopping became very inconvenient. I had to write checks at the bank, old school, if I wanted cash. It was like living in the 1950s with no card access to cash.
Turns out, slowing down access to money proved to be a good thing. If I ran out of cash, I couldn’t spend any more. In short, I had to plan my spending. And guess what? Little impulse purchases disappeared.
Consider hiding your debit card and see how much you can save in a month. Maybe grandfather knew best, after all.
Ray Brandon, CEO of Brandon Financial Planning, and his wife, Dana, a licensed clinical social worker, can be reached at brandonplanning.com.