No matter your stage of life there are probably many things you’ve learned in the last 10 years about money management which may have come at the expense of mistakes, from reading and research, or from the model behaviour of others around you. 

So, pretending I could travel back in time 10 years ago there are a few money lessons I would definitely tell myself.  1o years ago would have put me in the stage of life of being single with no children.  I had just graduated graduate school and was a few years into my profession.

Ownership and Responsibility

10 years ago I thought I owned all my money.  I didn’t have God’s perspective on managing money, although, I naturally wanted to manage it well given my organization and business skills.  But, I still thought it was mine to do with it as I pleased and I was far from using it for God’s purposes.  This was definitely evident in the absence of my giving.  Since then I’ve learned through some key scripture the foundational principles of ownership and financial stewardship that help me live in God’s economy.

The earth is the Lord’s and everything in it (Psalms 24:1).

So then, men ought to regard us as servants of Christ and as those entrusted with the secret things of God. Now it is required that those who have been given a trust must prove faithful (1 Corinthians 4: 1-2).

Saving

I think savingfor emergencies and having extra cash on-hand is so important.  10 years ago I was blessed to be making an excellent salary for my age and experience, but I had absolutely no cash to show for it.  Saving requires alot of discipline because you have to be able to say no in order to put money aside.  I will tell you this becomes increasingly difficult to do when you get married and have a family.  The expenses increase and their are more reasons to spend money.  So, what are some savings tips I would have provided myself 10 years ago?

• Auto deposit a portion of your savings into a savings account directly from my paycheck
• Make sure your savings is a separate savings account
• Set specific and attainable savings goals with an eventual target of at least 6 months of emergency expenses
• Differentiate savings between emergencies, auto and other future needs and make sure there are clear categories for these in your monthly budget

Work/Making Money

I would also give myself a lesson on work and making money.  I think my attitude when I got out of school was to chase after the highest paying job.  I definitely had some interest in my field of software and technology, but I was mostly attracted to the salary and didn’t pay as as much attention as I should have to my God given passions and talents.  

I’ve definitely learned I have passions and talents for my profession, but I think my hobbies outside of this work truly reflect what I love to do.  Today I believe in looking at these hobbies and figuring out ways to monetize them.  So, if your hobby is blogging on personal finance there is an opportunity to monetize that hobby by providing content and services to others.  The same could be true about many things.  I think Dan Miller’s book, No More Mondays by Dan Miller, helped me see the importance of this.  Therefore, I would buy this book for me 10 years ago and stress the need to read it and make sure you do the work you love.

Final Thoughts

There are many money lessons I would teach myself 10 years ago about money, but these three seem to be first to mind.  The first and most valuable lesson on ownership and responsibility truly drives all decisions financially.  If you do your best to manage money according to God’s truths, I believe you’ll thrive and prosper.

So, what about you?  What lessons would you have taught yourself about money 10 years ago?  Have you ever considered teaching others these lessons? 

As a spending oriented society we’ve grown quite used to having things done for us (myself included). There are many things your mom, dad, grandma or grandpa used to do themselves (do it yourself jobs) which didn’t cost them anything more than a little extra time. But companies today have learned to capitalize on the quick pace of life many of us tend to lead.

So, here’s my shot at some do-it-yourself jobs that can quite commonly be performed without requiring advanced training or unique skills. I think you’ll find you can save a little more money. If you have been paying them you may question why you ever paid to get these things done to begin with!

Mowing your yard

There are a tremendous amount of yard maintenance companies raking in the cash as soon as the weather starts warming. From fertilizing, trimming the hedges to mowing, these are tasks that most folks can do themselves. Use it as an opportunity to get some fresh air! Monthly Savings: $$-$$$

Creating your own landscaping design

I’ve always done our own landscaping around the house when we’ve decided to upgrade with more trees or shrubs. Landscaping can be quite costly. But just about anyone can quickly learn to plant a tree or shrubs and certainly flowers. Job Savings: $$$-$$$$

Washing and ironing your clothes

There is a dry cleaning service on every busy street corner it seems these days. While some clothing requires professional cleaning the majority can be machine washed and ironed. Just read the tag carefully and plan an extra load of laundry per week. Monthly Savings: $$

Changing the oil in your car

For most automobiles, there really is no secret or special skill required in changing the oil. Yet, there are quick car care companies across the nation with cars lined up outside on Saturday morning. I think it might just be faster to do this at home too! Yearly Savings: $$$

Washing your car

I will admit having your car washed can be a convenient service, but there is something about being outside in the spring or summertime on a Saturday afternoon washing the car that can be fun. This particular job can be quite costly, especially if you’re getting all the bells and whistles wash. Monthly Savings: $$

Cleaning your house

Years ago a house cleaner was only seen in the wealthiest of neighborhoods. But nowadays, you can find companies serviceing house cleaning needs everywhere. Make it a family event. Schedule one day a week in which the family pitches in and works together to get the house sparkling clean! Monthly Savings: $$$

Painting rooms in your house

If you haven’t asked for an estimate, painting a room in your house can be quite expensive. Doing it yourself can save you hundreds of dollars (maybe more). Painting can be done by almost anyone and can actually be a good way to relax on a weekend afternoon. Just turn on some tunes and get to work! Job Savings: $$$-$$$$

Performing your own home maintenance and repairs

I think I could write an entire post on this one area. There are plenty of jobs around the house that require little learning to perform them. As a homeowner, I’ve shored this gap up with my Home Depot 1-2-3 book that tells me everything I need to know about doing basic maintenance jobs around the house. I never knew I could repair toilets! Job Savings: $$$-$$$$

Doing your own taxes

Here we are in tax season. How complicated is your situation? Should you do your own taxes? I’ve found performing your own taxes with software such as Turbo Tax is easy. I don’t have to schedule an appointment with a tax professional and the software guides me through the process. Savings: $$$

Performing your own pet grooming

Many families have their favorite pet and take it be groomed by their vet, or other service. While a trip to the spa might be nice for your furry friend, pet grooming can be quite expensive. Monthly Savings: $$-$$$

What are some other common money saving do it yourself jobs you’d like to share with readers? Let us know in the comments!

This is an article I originally posted at Christian Personal Finance.

Personally, I was far from having a good understanding of personal money management, the importance of savings and avoiding debt right after college.  Although I made some financial mistakes, I can share some tips today in the hope you won’t do the same. 

10 Tips for Your Financial Life After College

Don’t finance a new car

Most graduates are excited to get a new job and decent salary after all their hard work in school.  But many of them look around and see the new cars their friends have just purchased and immediately feel they deserve the same.  You don’t unless you can pay cash.  You may be driving the car you had in college (if you were lucky to have one) for a while, but avoid financing a new car.  Financing a new car will put you in debt for more than $300 per month and you’ll live with that debt anywhere from 4-6 years.  It’s not worth it.  Rather, begin paying yourself a car payment and save the money until you can buy a good and reliable used car.

Don’t spend more on a credit card than you can pay off each month

Perhaps you already have a credit card, or are thinking of getting one.  A credit card can be good to use in certain situations.  But, make sure you don’t carry-over a balance at the end of each month.  While this may not make much of a difference at first, a hundred dollar balance will eventually turn into several hundred and then a thousand or more.  It happens to many people because using a credit card is so easy to do.  Only spend when you know you have the money for it.

Get on a plan to get out of debt

Speaking of credit cards, did you have one in college?  Chances are you may have some credit card debt and student loans to pay off.  Make sure you have a plan to start paying extra to get out debt as soon as possible.  Once you’re debt free, you can begin to save more of your income for future purchases such as a car and home.

Live on a budget 

Now that you’re earning money, you have to learn to manage money.  The best way to do that is by living on a spending plan, or budget each month.  Create a budget and track your expenses immediately. Personally, I like using a hybrid of the envelope budgeting system where you pay cash for areas such as entertainment and clothing, but use credit or debit for other areas.  

Don’t be too picky about your first job

Hey graduate, did you work hard in school and make good grades?  Congratulations if you did, but don’t be too confident and think you deserve everything the professional world has to offer the day after graduation.  Rather, focus on getting experience before pay.  Chances are your expenses will be minimal after school and you can work for less, but learn a lot about yourself and your future profession.  All this being said, don’t jump at the first opportunity out of school either.  Make sure the position is the right fit for you as well as the company.

Read the Total Money Makeover by Dave Ramsey

I know there are a lot of good personal finance books out there, but the one I probably enjoyed the most that got me even more motivated to get out of debt was Dave Ramsey’s Total Money Makeover.  It’s filled with great practical tips and will help you set your priorities straight.

Set aside a portion to give each month

Money is a powerful thing and we can’t control that power on our own.  If you’re a Christian, I recommend giving from your first pay each month to release the financial bondage money can have on you.  If you learn to give money first you can truly appreciate money as a resource that only comes from God which is your job to manage.

Rent a modest apartment

Are you starting to understand the theme here in this article?  Live modestly and get your finances heading in the right direction before you make a move to a nicer car or buy a home.  Try to find a safe,  but easily affordable apartment you can call home for the first few years.  Earn, give, save and get out of debt in these years and then consider buying a home when it’s affordable and you can make a 20% down payment.

Create a 5 year financial plan

On top of these tips you’ll want to set some goals for yourself.  I would advise doing this after you’ve been out of school and working for a few months.  Setting a five year financial plan can be encouraging because you have some real goals you can accomplish in a short amount of time.  It will also help drive your spending behaviour each month.

Set some money aside in a savings account

As a part of your monthly spending plan you’ll want to carve out at least 5% for savings until you have $1000 put back.  Then, stop saving and pay off any credit cards using that 5% plus any extra you can afford to put on them.  Once completed, you should build up a full month’s of living expenses in savings and then start tackling other forms of debt.  You can get some of the best yields available for your savings by using an online savings account.

Finally, put all these tips together in one big plan by following the Crown Money Map.  The Money Map has been a blessing for many and if you start following it in your life right after college you’ll be miles ahead of so many who have traveled these roads before you.

What do you think about these 10 tips for your financial life after college?

Build an emergency fund versus getting out of debt?

If you look at The Crown Money Map or Dave Ramsey’s Baby Steps you’ll find both suggest saving $100o before paying off debt. This is suggested to help you avoid the use of a credit cards should an unforeseen emergency related expense arise.  However, The Money Map, differing from the Baby Steps, suggests you save one month’s living expenses after paying off credit cards to further establish safety.  The Baby Steps suggest paying off all debt before saving more money.  Obviously, the Money Map is in favor of more initial cash savings.  

Believe me, I’m all for taking Dave Ramsey’s approach of using gazelle like intensity in paying off debt.  I hate debt.  But, I also don’t think it’s wise to spend too much time paying off debt with only $1000 in the bank.    Of course, Dave suggests you should be motivated to getting out of debt and making sacrifices to do so in a short amount of time.  I agree, but many people may pay down debt slowly with only this $1o00 in savings for a couple of years.  Having only $1000 in savings is unwise unless you can approach your debt pay reduction with the intensity he talks about.  

So, emergency savings or paying off debt?  The answer, is both.  You should save the initial $1000, pay off your credit card debt and then grow your cash savings to one month’s living expenses.  Once you’ve attained that savings goal, continue your debt pay off plan with Dave’s gazelle-like intensity.  

Use your emergency fund to get out of debt?

But, perhaps you’re unlike many people today and already have several months in emergency savings, but are still carrying some amount of debt around with you. Should you use some of your emergency savings to pay off your debt? 

The previous answer helps answer this question too.  In this particular situation, I go back to keeping the one month’s emergency savings on-hand.  For example if you have 3 month’s of expenses saved and are still in debt (other than the mortgage), I suggest paying off the debt and leave 1 month’s living expenses in your emergency savings account.  You can then build your emergency savings back up when you’re out of debt.  

The bottom line is you are still furthering your journey to financial freedom if you pause debt pay off to get to save one month’s living expenses.  One you start your debt pay off plan again, you’ll be much more financially secure and the chances of you going back into debt for surprise expenses will be much less.  But, make sure you’re using intensity, motivation and dedication in saving the one month’s living expenses, otherwise, it will drag on too long while your debt limits your freedom and costs you more money.

What do you think about an emergency fund versus getting out of debt?

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Post #1 Recap

Man’s Assumptions and Thoughts About Money

We could all use a little more money margin in our lives, right? For whatever reasons, at some point in time, it has become the norm to not have money margin.

What is a lack of money margin?  It’s being contacted by creditors, overrun with debt and spending money to please people we don’t care about.  It’s spending more money than you make in a single month!

In the first post, we discussed four common assumptions we have about money when God isn’t in the picture.   To quickly recap, if God isn’t driving your thoughts about money you will more than likely think…

• Money will bring you happiness
• Money will define who you are
• Money is yours to spend as you want to
• You’re not responsible for bad financial situations
• The best advice is found out there in the world in a guru’s brain

God’s viewpoint on money – establishing money margin

However, if God is driving your thoughts about money, your heart and mind will change.  Therefore, your actions and the way you manage it will change.  Now, let’s take a look at each of these assumptions from a Godly or Biblical perspective.  I recommend you preface them with:

If God is driving my thoughts about money, I will think…

Money doesn’t bring happiness

In fact, money can bring you heartache.  The love of money will absolutely harm you.  As we learn in 1 Timothy some people who have put money first and chased after more of it have caused themselves much grief and despair.

⁹People who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge men into ruin and destruction. ¹⁰For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs. (1 Timothy 6: 9–10)

Money can deceive you.  It lies to you.

²⁴“No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money. (Matthew 6:24)

My pastor noted this scripture doesn’t say you can’t serve both God and Satan.  Rather the word money is used instead. Money can become a God or idol quickly if you’re not careful.  The truth is that we can’t control money by our own little wills.  Money isn’t a neutral thing.  It has power and it’s impossible to control it by ourselves.

It is God’s to use for His purposes

God owns everything, including money.

¹⁰ For every animal of the forest is mine, and the cattle on a thousand hills.  ¹¹ I know every bird in the mountains, and the creatures of the field are mine.  ¹² If I were hungry I would not tell you, for the world is mine, and all that is in it. (Psalm 50: 10-12)

There has never been a dollar you’ve earned in your entire life that didn’t come from God.  Even when you might say you’ve worked hard to get a job or a promotion that pays you well; God gave you the health to earn every dollar.

You are fully responsible no matter the condition

I liked the example my pastor mentioned in the sermon. Dave Ramsey once said:   When the tide goes out you can tell who’s been skinny dipping. The tide might be in when you buy that new car.   Things are going well and you think you have the money to make the payments.  However, when the tide goes out, you have to work more to make it.

It’s important you don’t play the blame game.  If you’re in a mess, you have the responsibility to get out of it.  That’s actually the first step in getting yourself out of debt.  You have to take responsibility for the actions you took to get yourself in trouble.  But remember, as my pastor mentioned, you can reset your ways to Christ.

The best money advice is found in the Bible

As a Money Map Coach, I couldn’t agree with this more.  The best financial advice you can find out there is not in one person’s brain.  It is in the brain of Jesus!  There are two principles that Jesus shared that should be the foundation of developing the right perspective on money.

Avoid greed and the pursuit of possessions and more, more, more stuff!

¹⁵Then he said to them, “Watch out! Be on your guard against all kinds of greed; a man’s life does not consist in the abundance of his possessions. (Luke 12:15)

Give!  Nothing releases our hold on money more than giving to the Lord’s work and to others.

³⁸Give, and it will be given to you. A good measure, pressed down, shaken together and running over, will be poured into your lap. For with the measure you use, it will be measured to you. (Luke 6:38)

What are the implications of God driving your thoughts about money?

As we discussed in the first post, there are implications of following worldly assumptions about money.  Here is a quick recap:

• Spending tends to be completely selfish.  It’s focused on competitive spending (trying to have as much or more than others) and therapeutic spending (spending to make you feel better)
• Saving will seem senseless.  Why would you want to save if you have to spend to prove something to others?
• Giving will seem senseless.   You would never give money away because you would be losing it.

Implications of following God’s perspective of money

Spending will now be based on contentment

Your focus will now be on managing God’s resources for Him and not spending it for yourself.  Therefore, you will be content based on what God has entrusted you to manage and no longer feel you have to spend to compete with others.

I have learned to be content in whatever circumstances I am.  I know how to get along with humble means, and I also know how to live in prosperity….I can do all thing through Him who strengthens me (Philippians 4:11-13).

Savings is a wise thing to do

Saving is wise because it provides the freedom for you to be used for Godly causes when you are asked to do so.

Giving becomes joyful

The only way to break the iron grip of money is to give it away!!!

³⁵In everything I did, I showed you that by this kind of hard work we must help the weak, remembering the words the Lord Jesus himself said: ‘It is more blessed to give than to receive.  (Acts 20: 35).

Your 3 challenges

Our pastor closed the sermon with three challenges.  We were asked to write them down and identify one or more areas we needed to work on.

• Go cash only.  If you go with cash only you are forced to spend only what you have and no more.  As an aside, I’m not against credit cards as long as they can be used wisely and paid off each month.  It’s when the balances start carrying over from month to month when issues with debt arise.
• Save regularly.  I think an ideal goal (outside of retirement savings) is to save 5% of your net spendable income (income after taxes and tithe).  If you can save 5% regularly, you can build an emergency fund that will help stay out of credit card debt.
• Give to the Lord’s work.  Give 10% of your next paycheck and trust God to replenish.  I love this challenge!  We decided to take that same challenge a few years ago and have been blessed more than we could have imagined.

In conclusion, money margin is something you can really have.  You will discover it,  if you follow God’s Biblical financial principles.

So, what will be your challenge?  Will you do one, two or all of these?

Foundation of financial stability

But why do you call Me ‘Lord, Lord,’ and do not do the things which I say? Whoever comes to Me, and hears My sayings and does them, I will show you whom he is like: 4He is like a man building a house, who dug deep and laid the foundation on the rock. And when the flood arose, the stream beat vehemently against that house, and could not shake it, for it was founded on the rock. Luke 6:46-48

The strongest structure will not stand on a weak foundation.  A structural example of this is the Leaning Tower of Pisa. Although intended to stand vertically, the tower began to lean soon after its construction because it was built on a poorly laid foundation.  Our financial foundation are the principals of biblical stewardship and giving.  Once this foundation is laid, you have the potential to build wide (diversity) and high (wealth, profit and increase).

The pillars promote a balanced and diversified approach to financial stability.  Conventional wisdom dictates you should not put all your eggs in one basket. Using the pillars as an example, it may be tempting to build the savings pillar without any regards to insurance.  A medical problem could wipe out months, even years of savings.  The Bible also supports diversification:

Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth. Ecc 11:2

Let’s take a closer look at some of the building blocks that make up the 3 pillars.  In the diagram, I placed savings in the middle because it is the load bearing beam.  If you are beginning to build, I recommend starting here.

Savings

Sure you could save money like grandma used to by stuffing it under a mattress, but there is absolutely no security in that!  Find a bank or credit union that is backed by the FDIC or NCUA respectively to insure your money.  Build an emergency fund large enough to match your situation and comfort level.  The personal finance experts cannot agree on the amount.  Some advocate 3 months of expenses, and others advocate as much as 9 months.  Consider the following factors and set a goal/amount that works for you.

• Risk tolerance
• Stability of income stream(s)
• Number of income streams
• Number of dependents
• Other assets

Savings should be secure, low/no risk and accessible when needed.  Traditional savings accounts at a brick and mortal bank or an online high yield savings accounts are appropriate for an emergency savings stash.  As your savings accumulates, check to see if you are eligible for a money market account. Money market accounts work like regular bank accounts except they have higher interest, a minimum balance, and a low limit on the number of withdrawals allowed per month.  This is an excellent fit for an emergency fund as interest will accumulate.

Another building block in the savings pillar is the certificate of deposit (CD).  CDs have a fixed term and typically a fixed-rate.  There are withdrawal penalties, so this is something that should not be considered for an emergency fund.  Generally, the larger the principal deposit and term length, the higher the interest rate.  CDs attract conservative savers and investors because of their low risk.  However, the return is low for the amount of time your money is held up.  The CD laddering strategy attempts to alleviate this.  The idea is to start several CDs at the same time at varying lengths (example: 1yr, 2yr, and 3yr).  As the CD matures, it would be reinvested at the 3-yr term (highest interest rate).  Eventually, all the CDs will be invested at the 3-yr term, however one would mature every year.  Giving you a bit of flexibility.

Insurance

Insurance is like bitter pill.  We take it because we know it’s good for us, but no one really wants to.  However, having insurance is the responsible thing to do, and in some cases it is required by law.  There is insurance for everything under the sun!  The key is to make sure you have enough of the right kind of insurance.

Probably one of the most popular insurance decisions will be whole or term life insurance.  Term insurance is the cheaper of the two.  It provides coverage for a predetermined amount of time (eg. 30 years).  Whole, or permanent life insurance is open ended, providing coverage as long as you pay the premiums.   They also accumulate a cash value.  Generally speaking, there are better mechanisms than a permanent policy.  If you are disciplined in your investments, you may not need to rely on a life insurance product to save for you.  To see where you line up, use bank rate’s insurance calculator.

If you are going to operate a motor vehicle, car insurance is a requirement in every state.  The amount of minimum coverage varies from state to state.  A 2006 report from the Insurance Research Council estimates more than 14% of drivers are uninsured.  The penalties are hefty and not worth jeopardizing your financial stability.  Don’t do it!

Selecting the amount and type of insurance is a delicate balance between cost and peace of mind.  Not enough insurance and you may find yourself unsettled and in dire straits should a need arise.  Consequently, if you spend too much on insurance, you may not have enough to save or build the third pillar…

Investments

Unlike savings, where your money is stored in a safe, accessible manner; investments involve risk with greater potential for gain over extended periods of time.  The primary focus of investing is increasing your net worth and achieve long term financial goals.  The amount and types of investments you choose will vary according to your risk tolerance.  The market fluctuates and your portfolio graph may look like the latest thrill roller coaster.  However, over long periods of time (10 years or more), the market traditionally increases between 8-10%.

Popular investments include

• 401 (k) retirement plans – Many employers will match a portion of your contribution
• Individual Retirement Accounts
• 529 College Savings Plan – Each state’s plan is different.  Shop around!  You don’t have to select the plan in your state of residence
• Mutual funds & Exchange Trade Funds

Of course there are plenty of other entities not listed here.  This is not meant to be an all inclusive list.  When you start with a strong foundation and these 3 pillars, you are on your way to building financial stability.

What does your blueprint for building financial stability look like?  Do you use the three pillars listed?  Could you include more pillars?  Less?

Article written by: Lakita Humber Lakita is an IT Systems Administrator by profession with a passion for the things of God, worship arts, and financial stewardship. She started Personal Finance Journey as a way to help and encourage those on the road to financial freedom. She has been blessed with the opportunity to minister throughout the U.S. and Internationally as a workshop speaker and presenter. Connect with Lakita on Twitter & Facebook.

Without an adequate “rainy day fund” or emergency savings, sudden job losses and declines in income forced many people deeper into a debt trend that has plagued America for years.  In fact, debt is just the opposite of savings according to Larry Burkett.

Saving is making provision for tomorrow, but debt is presumption upon tomorrow.

Savings can be a challenge because our culture encourages doing just the opposite.  In my recent post on contentment and peace I discussed how our culture encourages discontentment.

That’s right.  If we can be encouraged to be discontent with our current situation, we are more likely to spend on products and services that lead us further away from saving and many times deeper into the arms of debt.

Thankfully, there are some good Biblical principles we can surface from scripture that can help guide our way.

Save for a coming famine, or challenging times ahead

Just as Joseph saved during a time of plenty to prepare for a coming famine, we too must expect their will be challenging times ahead.  I don’t have to convince anyone of this since our economy is still in a state of recovery.

Let Pharaoh appoint commissioners over the land to take a fifth of the harvest of Egypt during the seven years of abundance. They should collect all the food of these good years that are coming and store up the grain under the authority of Pharaoh, to be kept in the cities for food.  This food should be held in reserve for the country, to be used during the seven years of famine that will come upon Egypt, so that the country may not be ruined by the famine (Genesis 41:34:36).

An example of wise saving

Scripture also tells us that Ants are good examples of creatures that actively save up or store for the future.

Four things on earth are small, yet they are extremely wise: Ants are creatures of little strength, yet they store up their food in the summer (Proverbs 30:24-25).

It’s interesting how we can learn wise principles from one of the smallest creatures on earth.  Yet, with Ants, saving seems to be built into their genetic structure.  We too must make saving become so common little thought has to be put into it.  It has to become a natural act of discipline in managing money.

It’s foolish to spend all we have

Scripture tells us that it’s simply foolish to spend all we have.  While we might be tempted or even encouraged to spend more and more, doing so limits the opportunity to prepare for the future.

In the house of the wise are stores of choice food and oil, but a foolish man devours all he has (Proverbs 21:20).

Do you ever feel like you devour or spend all you have?  At the end of the month, many individuals or families look at their checking account and realize there is nothing left for giving or saving.  One of the best ways we can overcome this issue is to pay ourselves after we give each month.  Once the money has been marked as savings and moved beyond immediate reach or access you are much less likely to spend it.

Do you face these common challenges in saving?

I don’t have enough money to save

I’m of the opinion that we need to plan like we’ll never receive another increase in income.  Just as debt is presuming on the future; you can presume you’ll have more money to save later.  The right giving, saving and spending mix has to be determined now and lifestyle must be adjusted accordingly.

Still, if you’re having trouble getting started, just focus on starting with a little bit.  If you’re goal is to save 10% of your paycheck, you might not be able to make changes to do so overnight.  But most people can make changes to get savings started.  Set a timeline in which you will increase savings and do the work to meet your goals.  For example, by April, I will increase my savings by X amount.

I spend my savings each month on common expenses

This is a common issue and it’s usually the result of not having a refined enough spending plan to capture all the necessary expenses for the month.  It can also be the result of not having enough of a barrier between you and your savings.

To combat this issue, make sure your spending plan or budget includes all the necessary spending categories.  You can learn more about budgeting by following a 3 step plan budgeting plan highlighted in my video post.

Creating barriers to savings involves getting your savings into another account.  Usually this account requires some thought and a little bit of work to get access to the money.  You’re much more likely to use it if it’s in your checking account.  To create these barriers set up automatic savings deposits as well as consider using a high yield online savings account.

What do you think about these Biblical principles to savings and how are you following them today?  Please share your tips and ideas with other readers.

Each of the posts from the Bible and Money series are based on principles discussed during Money Map Coaching sessions and the Money Map Coach participants’ guide.  You can learn more about Money Map Coaching at Crown Financial Ministries.  You can also visit my Money Map Coaching page.

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Why you need another savings account

I’ve been thinking about adding another savings account for a while now to handle savings for vacations, property taxes, HOA dues, Christmas and other types of savings.  I know I’ll generally need this savings in the next 1 – 2 years.  When it’s needed I can simply transfer the money to my checking account and use it as needed.

I’ve been comingling such funds with my regular checking account for a while now and it’s just too easy to access them.  There is always a need or reason to dip into such savings.  Having a new high yield savings account, such as Ally Bank, will create a nice barrier between me and my savings.

In fact, MattAboutMoney.com just wrote a post this week about the need to have two savings accounts.  Matt talks about using one savings account for emergency savings and the other account for the same purposes I just mentioned.  He provides some great advice on how to use this additional savings and the important reasons around it.

The Ally Savings account is a high yield online savings account.  You may know that an online bank decreases its cost because it doesn’t have the same overhead as a typical brick and mortar bank. These overhead costs are then passed onto customers in the form have higher yields on savings accounts.  Yeah for us customers!

Background on Ally Bank

I did a little research on Ally to make sure it was the right choice for me.  Ally Bank is built on the foundation of GMAC financial services.  I appreciate how Ally openly states they value integrity as much as deposits.  You don’t hear a statement like that often.  As a result, they are continually looking for ways to improve the customer experience.  They have 24/7 customer service to make themselves available anytime you require assistance.

It’s quite obvious Ally appears to be focused on the customer and helping people increase their savings.  You can set up what they call sleeping money alerts.  When Ally sees that you could do more with your money to increase earnings you can receive an email alert with suggestions.  Another great benefit is that you receive daily compounded interest.  This means you earn interest on the interest you earn each day!

I also found that you can open an account with $0.  This makes the process easy in that you can open an account immediately and wait to deposit funds when you have them available.  There is no minimum balance and no monthly fees.  Of course, savings are FDIC insured. 

Steps to open an Ally Bank savings account

As I mentioned in the video, I’ve chosen Ally as a new savings account for our family.  I just set up my account this week and it was easy!

It only takes a few minutes.  All you need to do is enter some basic information and make a few decisions to complete the enrollment process. 

Here is a brief run-down of the steps I encountered:

• Determine the account ownership type.  In other words, you need to determine how many account owners you want to have for your account.
• Select the type of account you want to set up.  In this case, I chose the savings account.
• Enter certain personal information required for opening the account.  You can also decide how you want statements delivered to you (email or mail).
• Decide how you will make your initial deposit.  You can mail in a check or transfer funds from your existing checking account.  If you decide you want to use your checking account you’ll enter the required information to transfer your initial deposit.
• Bingo, you’re done!  Log into your new account and start checking things out.

Click here to open up a savings account with Ally Bank!

What do you think of having two savings accounts?   What do you think of this high yield savings account opportunity from Ally Bank?

The article mentions banks need our business more than ever right now, but they are continuing to push people away because of high fees and poor service.

As with most products, I think it just goes back to having good customer service and a quality product to be competitive.  If one of these is missing it makes it difficult to become a long-term or repeat customer.

Unfortunately, there are a lot of banks out there that don’t get it.  The article pointed out that just 35% of people are committed to their bank, according to a recent J.D. Power & Associates study.  Given 65% of people are potentially open to a change; I thought it might be good to highlight the ideal characteristics that might be used as criteria for evaluating another financial institution.

Ideal characteristics to evaluate your new bank

Money management tools

Tools may include the ability to easily transfer funds between accounts, or ways to look at all of your accounts at a glance.

Easier ways to manage saving

A key to saving is prioritized saving.  Once you have your list of savings needs with your emergency fund first, you should be able to separate funds for such things as car savings, or other upcoming needs.

Deliver good customer service

No matter the tools and resources available on the web, people are still going to eventually want to speak to someone with questions or problems.  The better banks will retain some mode of customer service contact for their customers and make this service readily available for them.

On the go or mobile capabilities

The trend in software is to provide mobile versions.  With devices such as the iPhone, people are able to get access to information much easier.  Banks and other financial institutions should start offering customers secure ways to access their information when on the go.

Realistic about fees

Finally, no one likes paying fees, especially, if they are ridiculous overdraft fees and ATM fees.  Some banks provide the ability to link checking accounts to brokerage accounts or credit to use for overdrafts.  Of course, good money management will prevent this from occurring, but people do make mistakes from time to time and a sky high overdraft fee and a few overdrafts can add up to over $100 fast.

Additional characteristics to evaluate your next bank

ATMs

One characteristic not mentioned, but I think is important is the ability to access your money via ATM when needed.  I don’t think ATMs are absolutely necessary, but it does add one more layer of convenience.

Interest rate

Another characteristic not mentioned, I think is on everyone’s minds is the interest rate or yield on savings accounts.  I think this one should be added to the list and considered as different banks are evaluated.  While some banks may be known for their checking services, they may not do as well with the yield on their savings accounts.

ING Direct “gets it”

Interestingly, ING Direct was mentioned a few times in the article as a bank that “gets it.”  ING is an online institution I’ve recommended here at One Money Design.  You can read my review of the Orange Savings account here.

Noted was ING’s ability to create sub accounts or buckets for managing money.  They also have a reasonable policy for overdrafts by allowing the link up with a line of credit at what is a lower rate than most credit.

• Learn more about the Orange Savings Account.
• Learn more about the ING DIRECT Checking Account.

What are the ideal characteristics for you when it comes to evaluating a new bank?