Do you need a better system for saving money? If you do, then this blog post is for you! Today, we’re going to share one of our favorite secrets for saving for the future and how we avoid “emergencies” from popping up all. the. time. Ready? Let’s go!

When we got engaged, Amy’s uncle gave us the most life-changing and marriage-enriching book we’ve ever read. It’s called The Total Money Makeover by Dave Ramsey. If you’ve read it before, wahoo! You’re in good company. If you haven’t, stop. Right where you are. Click here and get it in your hands. It’ll be the best dollars you ever — ever — spend. It truly changed our life.

One of the principles Dave teaches is to plan for the future so things we know are going to happen don’t turn into financial surprises, emergencies, and crises. Or all three. The logic in the example he gives is pretty straightforward. Here’s the story.

A man buys a building. After he buys it, he asks a roofer, “How long before I’ll need a new roof and how much will it cost?”

“You’ll need a new one in ten years and it’ll cost $10,000,” he says.

At that point, the man has two choices:

1. Don’t save money. Wait ten years. Hope there’s enough cash to cover it when the roof starts caving in. And, if there’s not enough cash to cover it, finance the new roof with interest (and low monthly payments!) and pay more than $10,000 over the next ten years to pay it off.

OR

2. Divide $10,000 over ten years, and make a payment of that amount to himself each month in a savings account that earns him interest, so that when the roof starts caving in, it costs him less than $10,000, he’s’ not worried about whether or not he has the money and he doesn’t owe anybody anything. If you’re doing the math, since there are 120 months in ten years, that’s only $83.33 per month.

It’s a good plan, right? We agree! Which is why we do all of our saving for things six months out and further.

Here’s how:

1. Make a list of things you know you’ll be paying for in the future and how much they’ll cost. Christmas is the easiest example. If you plan to spend $600 for Christmas gifts this year, you need to save $50 per month between January and December to have $600 in your bank account. And don’t forget! You’ll have a little interest to buy a red cup Starbucks while you’re shopping, too!

For us, that was the easy part. The hard part? Actually doing it. We had two problems to solve: First, we didn’t want to have all that money sitting in our checking account. We wanted to be able to see it broken out so we could feel like we were making progress!

Second, we’re not that disciplined, you guys. So we needed the money to be saved monthly without us having to think about it — and so we couldn’t spend it!

2. To that, we found a free solution: The Capital One 360 Online Savings Account.

A few things…

First, a totally online bank weirded us out at first, but it’s FDIC insured, which means our money is 100% safe and insured by the government up to $250,000.

Second, the accounts are 100% free, there are no minimum balances, and you can have up to 25 different savings accounts under one user name for no. additional. cost.

Third, we’ve been using this system for YEARS for free and love it. If you click over to Capital One, check it out for yourself, and open an account using this link, you’ll get $25 just for signing up and we’ll get $20, too. So that’s pretty cool. Especially because you’re going to love it! We definitely do or we wouldn’t be blogging about it! Savings accounts aren’t exactly the sexiest topic… until you start getting free money from them.

Boom. Smack. Pow!

Okay, so once we got our account, here’s what we did: we made a separate savings account for each and every category we knew we’ll eventually have to pay for, like Christmas gifts, for example. Another one we love is car insurance. When you pay it in full semi-annually (once every six months, you get a discount AND you get the interest while the money was sitting in your Capital One savings account!)
It’s the best kind of double-dipping, when you think about it. Next (this is key!) set up automatic transfers from your linked checking account to each of your savings accounts. If you get paid every two weeks, do every two weeks. If you get paid monthly, do that. Once the automatic transfers are setup, you don’t have to touch it again, and you’ll be making progress and earning interest toward your savings goals.

Lastly, when it’s time to pay for something big, like your new roof, car etc. (ten years from now!) just transfer the $10,000 to your checking account, pay for the roof, and use the interest to go to dinner without stressing about it at all!

Boom. Smack. Pow! Awesome, right?

We hope this helps you (like it helped us!) be a little more organized, have a little more peace of mind, and have a little more cash in your pocket. You can start with setting up your account today! Here’s the link one more time in case you want to give it a try!

Good luck, friends! We’re cheering for you! Happy savings!

Update: If the referral link doesn’t work for some reason, just shoot us an email and we’ll send you a fresh one 😉

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Alisa

7 comments
filed in: Education

    Eric

    Doing this now!

    Amy & Jordan

    Do it! :)

    seneca

    I just signed up!! So excited!! :) Thank you!

    Amy & Jordan

    So awesome! :)

    Marilyn

    Yiay!We just did it! But now we are full of questions. Let's hope we don't mess this up...yikes!!!

    Amy & Jordan

    So awesome! Good luck!

    Kelly

    This only works if you aren't living paycheck to paycheck.