Saving and Investing Money Online – Part 2

“Live Like No One Else, So You Can Live Like No One Else.”

– Dave Ramsey

photo credit: paper by design

Mindset (or “the emotional side of money”)

There are a lot of folks who think and approach saving money as, “if I have leftovers I’ll save some money.” I’ve been through that thought process as well as other folks in my life – like my two daughters who are in their twenties and have listened to me preach to them about what they should do and how they should think about their money.

I would say that you need to start thinking of saving money the same as buying something. So if you go and buy that $4.00 latte every day or every other day, then you have to save as well. That is a hard mindset to get to.

When we receive something for our money, it makes us feel good. You give your hard-earned money to someone when you buy a book and you get this new, crisp, wonderful smelling thing that you can read or a new piece of clothing that demands our friends to look at us and exclaim, “you’re the bomb, that looks so good on you, snap!!”

Think of anything else you purchase that gives you this immediate gratification. Well, with saving money we don’t get anything in return…yet. We put money away and no one gives us anything in return right away. I think this has a lot to do with why people don’t save. It’s boring, which it should be, but more importantly you don’t get anything. It’s as though we’re screaming, “I WANT A PRIZE DANG IT!! GIVE ME SOMETHING NOW!!” for saving money.

A lot of money gurus, financial advisors and planners, talk about living off less than what you make. So if you make $2,000.00 a month, live off of $1,950.00 or $1,900.00 or $1,850.00 or $1,800.00, etc. and really think that you do. Change your mindset and you’ll change how you view your money.

One of my daughters lived in an apartment that was really nice (her first) and it seemed like she could afford it when she made out her budget. But, one year after the lease was up, the lease went up. She told me she wasn’t going to sign up for another year and was going to look for another place because she didn’t fee like she could afford to live at her apartment she was in. She found a new apartment and it was $200.00 less than her first apartment. Woo Hoo!! I told her to increase her savings every month then. She said, “We’ll see.” Youth.

Paying Down Debt

So if you’re asking the question whether you should pay your debt down or save, you end up realizing that that’s not the question. You have to save, and then you figure out how to pay down your debt. You have to take care of yourself and your family if that applies.

What this action looks like then is after you set up your online savings account (from part 1 of this series) and link it to your bank checking account, the money will be transferred automagically and you’ll receive emails reminding you that they will be taking money out in the next x days and then another email after they’ve taken the money out.

You can set a filter on your email reader so those emails go directly into a folder with the name of your online savings account, like HSBCDirect. When that is setup, you can just check that folder every month or whenever you feel the need to. That also helps for those folks who feel the need to check all the time when they see those emails come through. There’s no need to constantly check your online savings account.

Then during tax season, look at your online savings account and make adjustments if you need to, by depositing more or lessen your automatic deposits if your account is reaching that desirable range you’re shooting for. Take the time to verify your preferences as well, email address, home address, etc.

That’s it for this part. Next post in this series will talk about contributing to your company retirement plan if that is available to you.

More to come…