It’s summer and things change a little bit in the summer, don’t they? Here’s what I’m suggesting: Look at all your accounts, all your different savings accounts—all of it—and try to think about your money as one big pile.
Then, realize that inside that account, are a bunch of very discrete jobs, responsibilities, and assignments for your dollars. It doesn’t matter where the money is—that does not and should not affect its job.
So when you’re looking at that money, you’re not looking at the pile, you’re looking at the discrete tasks that it needs to do.
A lot of you have used your savings accounts in the past to hide money from yourself. You’re worried that you’ll spend it and what you do is you create this one specific job for that money, you just call it “savings” and you say, “I always put money into savings and it feels good and I’m glad I’m doing it.”
The Revolving Door Of Savings
Money goes in and then money comes out. Why does the money come out? You don’t know. Something came up. Maybe you overcharge on your credit card and you have to recover from that. Maybe something happened with the car and you have to recover from that. We don’t know. But when specific money in a savings account does not have a specific job, it tends to be robbed. We rob savings easier when those savings dollars haven’t been given specific jobs.
Summer Savings Shutdown
My plea to you, and this is just the case for simplicity because it’s summer and in the summer we can simplify and relax and chill out a little bit. Maybe we could look at all these accounts and shut our savings account down, move that money over into your checking account, and give that money a specific job or two or three in your budget. And then trust your budget, trust your category balances, make decisions based on those category balances.
Don’t think that you’re hiding money from yourself by sending it to a different location. That doesn’t work. You know it’s there but become disciplined and practice about the idea of letting the balance constrain your decisions, constrain your spending, and help you to be creative inside those restraints that you’ve placed on yourself. That is effective and that will simplify your structure.
Just try shutting down one account and see what happens. If you don’t like it, reuse the savings account again. But test shutting one of those down, moving it over your checking account and giving it jobs in your budget that are specific. See what happens.
If you can’t wait until next week for more whiteboard wisdom, subscribe to our YouTube channel. If you have a question or an idea you’d like us to address in a future Whiteboard Wednesday episode—we’d love to hear from you: [email protected]