"How did you save so much money in such a short time???"
We get this question often, and many of the people that asked us would go on and say, "Oh I can't never do that. I have so many bills to pay and I don't make enough to save."
I really do understand how that feels. I've felt like that until 2 years ago, and never understood how anybody could put away money in the savings account. What I learned was that the art of saving was really an art that required a lot of practice and a solid strategy.
I think many people are doing this, as I was before. "Okay, whatever I have left at the end of the month, I'll put that in the savings account." When you are going about it that way, nothing is left at the end of the month. The first key to saving successfully is to "treat the monthly saving amount as a bill to pay."
The second key, which actually might be more important than the first one is budgeting, or
how to budget "correctly." For this method, you'll need Excel, 2 checking accounts at the same bank and a saving account at another bank (I recommend
American Express Personal Savings personally, because it has the highest interest rate.)
Here is the spreadsheet
format I like using. This also includes the area to record cash tips taken home daily. If you work for a salary or wages only, disregard that part. The key to using this format is to enter all income as positive and all bills (payable) as negative numbers, so that you can tally up at the end of the month.
If you are like me who works on tips and hourly wages, you should project your tips income very conservatively. If you receive exactly same amount in checks every month then use that amount. The payable items are in the colum by higher priority to lower, in my opinion, and highly suggested that this order be followed. (Notice the "going out" budget is at the very bottom???)
In this example, you have a surplus of $105 in the projection column. From that you know you have a wiggle room of that much in case something happens. In the actual column, the surplus is $204. I think you are entitled to use this money as you please at the end of the month, because you already saved what you planned to save.
Now the multiple accounts trick. I've always had one account that I deposited my income which is connected to a debit card for daily use, and another one that I transfer the money into to pay the bills with. All my bills except the rent are paid online, and I use this checking account number for the money to get drafted and write checks occasionally. This way your checks or payments would never bounce, and you always know exactly how much you can use on hand in your debit card account for daily shopping.
Dear my fellow restaurant tip workers.
Do deposit the cash to your bank account as soon as you get it! And do all of your shopping on your debit card. This way you can keep track of all of your purchases. Carrying cash around after work walking by your favorite bar IS the reason why you can't save!!!
The third account is the one that builds your savings. Why should it be from another bank, not the one with the checking accounts??? Because you want to make it as hard as possible to touch the savings. What I recommend doing is moving the savings amount from the deposited income in the checking account #1 into the deafting only account #2, then link the outside savings account to this #2 account.
Ask me any questions if this wasn't too clear! Good luck everybody!
