Archive for savings

My FBP Account, and how I learned to have splurging as a goal

One of the biggest problems I had with saving was that I wanted lots of things.  I tried telling myself that “things” don’t matter when I have bigger future goals.  But, the problem with that was that to an early-20-something-year-old closet tech geek and wannabe artist is that the future just doesn’t seem quite real when compared to a new wacom tablet or gadgets for my Holga camera or a really cool usb microscope.

However, my relatively low income, my lofty savings goals, and an aversion to carrying a balance on my credit card instead left me with no way to feasibly buy anything just for fun and left me with the uneasy feeling like I was somehow missing out on my youth to focus on a very hazy future.  “What if I die tomorrow? or in 5 years and I really don’t need any of my retirement money!” is a popular refrain in my mind.

And whenever I did break down and splurge on something, the next month I would have to cut back even more savagely on my normal day-to-day spending just to make sure I paid off my credit card balance at the end of the month leaving me feeling even more deprived and upset.

I tried to focus on only free activities and told myself I didn’t really NEED that <insert really cool gadget> and it would just be cluttering up my limited space at home.  I tried not to watch TV or read magazines so I wouldn’t see advertisements.  But I would catch myself looking longingly at my friend’s spiffy mp3 player that they could strap onto their arm as we went to exercise together while I fiddled with my ancient CD player that skipped every time someone breathed too hard on it.  And then I contemplated how many functioning security video cameras they actually had at Circuit City and whether I could get away with filching something.

Obviously, this system was definitely not working.  I needed to be able to save for my goals but also I needed to have some fun once in a while and get to buy myself something just for the sake of its coolness.

So, I opened an ING sub-account three months ago and named it “my FBP account”.  FBP stands for Fun Big Purchase.  Every month I stick a little money in it.  Whenever I save up $300 or so, I plan to withdraw the money and splurge on something Fun and Big (meaning expensive).  While I’m waiting for the balance to reach that number, I like to plan out exactly what I want to purchase and this makes me excited since I know that eventually I will get it and I’ll actually have the money to buy it without cutting back on anything.

In fact, I have 5 different sets of things I want to purchase with that money and I really have a great time trying to prioritize them or trying to find the best prices for them.  And a great benefit of this plan is that since it takes me quite a few months to save up that amount in that account, it lets me really think about exactly what I want as opposed to short-term gadget lust so whatever I’ll end up getting is something that I’ll really treasure and want.

And…just maybe I’ll get that fancy new mp3 player eventually.  But for now, I just listen to the radio.

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Pennies and Nickles and Dimes…Oh My!

Forgive the Wizard of Oz title.  I just saw the musical “Wicked” last weekend and thoroughly enjoyed it.

I have this piggy bank which actually looks like a pig.  Every so often, my wallet gets so heavy with coins that I have to dump all the coins into the piggy bank.  Recently, my piggy bank became so full that I couldn’t stuff any more coins in.  So, while I was at Office Depot, I saw a bag of coin wrappers so I added that to my cart.

I spent a few hours today wrapping coins and when I was finished, I sat back in amazement.  The coins lay in a pile and as I added them in my mind, the amount was staggering considering they were just masses of coins.

Tomorrow I’m going to take it to the bank and deposit it in my account.   This however, has opened my eyes to the benefits of getting a habit of saving.  It’s really not that hard.  All you have to do is to dump your change at the end of the day into a piggy bank, roll it up, and deposit in a bank every so often.  Sure, of course it saves time to dump it into Coinstar or something simple but then you’d have to pay fees for that and my frugal heart complains every time I think of unnecessary fees.

Bank of America has a Save the Change option for their checking account which automatically rounds up your transactions of the day to the nearest dollar and deposits the difference automatically into a savings account.  However, sometimes it’s inconvenient especially if you’re regularly low on funds because it’s really easy to overdraft with that option.  Besides, it’s really satisfying to see the coins pile up.

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Not being Dependent anymore

It was such a great day graduating from college until I was hit by reality.  Now, I don’t count as a dependent so not only do my parents not get to have me as a tax deduction, I myself am not exempt from tax withholding anymore.  I have to purchase health insurance, auto insurance, and AAA membership since I’m not covered under my parents anymore. I have to save up for graduate school since I promised my parents I’d pay for that myself.
In a few years, I’ll be looking to buy a car and then take on a mortgage, cable costs, estate taxes, and the cost of maintaining my own home.  I’ll get married so I’ll have to juggle wedding costs, joint accounts and the taxes that come with that.  I’ll have kids which will entail life insurance, 529 college savings plans, family vacations, and the various costs that come with child-rearing.  I want pets so pet food, veterinarian visits, and flea collars.

On top of this, I have to save for retirement and possibly have to care for my parents as they get older.

It’s definitely not like what I imagined when I was little dreaming about a successful career with a lot of money.  Sure I’ll finally be earning a decent salary once I find a great job, but it’ll be eaten away just as quickly.  I finally understand why sometimes it’s just hard to get on top of the finances but I figure if I instill good habits with myself now, it’ll be much easier down the line.

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Why I Don’t Have Guilty Pleasures Anymore

Now that I’ve started absorbing financial knowledge and trying to have a good financial mindset, I’ve discovered something unpleasent.  I feel guilty splurging on myself now!  Of course, in a savings perspective, this is a major plus but it sure makes my life a bit more dreary if I can’t treat myself out sometimes to yummy food or that really cute new pair of shoes every so often without giving myself a guilt trip.

So, I’ve decided to set up a mini-account in my ING savings account just for splurging.  I’ve even named it “Splurge Savings” which I admit is a bit of an oxymoron.  But, hey, I treat it just like any other savings account, auto-deposit money into it, hopefully earn a bit of interest on it.  Then, once a month or so, I take some money out specifically to spend on something frivolous. I’m not going to allow myself to spend it on something practical at all!

This way, I’m still putting most of my money away but whenever I want something really badly, I tell myself that that’s going to be my once-a-month splurge, wait until it’s that time of the month (you know what I mean!), and splurge on myself.  This makes me cheerier, less prone to spend money randomly on frivolous things, and sort of reward myself for sticking to a frugal mindset most of the month.

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Struggle with Materialism

I just graduated from college a few weeks ago and I received lots of gifts of money from relatives.  This is good right?  Yes, I watched in fascination as my checking account climbed to heights never before known in my starving college student days.  My mind already imagining all the lovely things I could buy with it.

But, I had to forcefully shut down that line of thought.  I had to switch into my newly formed financial mindset and thoughts of emergency savings, retirement accounts, investments, graduate school savings, and car savings all whirled around in my head.  Suddenly, I discovered that all that money sitting in my checking account was actually not that much after I divided it into all my other accounts and savings.  A few hundred here and a few hundred there and once again I was left with piddling amounts of money once again to spend on myself.  It was quite a disappointing experience.

I kept telling myself that I’ll be better off later, that I’ll retire in tropical islands with the money I save now, but the devil on my shoulder kept whispering to me “It would matter if I died early would it?  Someone else would just enjoy all the money that I had painstakingly scrimped and saved away.  They’d probably spend it on themselves anyways.  Why shouldn’t I just enjoy the now and make myself happy.  Live everyday as I’ll die tomorrow mentality is good!  Carpe diem!!”

But sadly, I swept that devil off the shoulder and transferred all the money to different accounts and now I’m stuck looking at the piddling amounts again.  I keep telling myself that it’s for a good cause: myself!  But, I still feel kind of bummed.

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