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| Can't bear to part with the milk jug but I part with the money in it too easily! |
Hoarding money is supposed to be good, right? I mean, when you hoard money it's called saving. Supposedly. For a long time I've had some odd habits with money. I have half a dozen bank accounts. I have three coin jars. I have two wallets. Talk about money clutter. Why?!
Saving is not something I'm good at. I've tried to get around it by putting my money in silos, or rather, bank accounts. One's to save for a trip to Spain, one's for a rainy day, one's to invest, one's for clothes, one's for music lessons, etc. Inevitably, though, something happens and I end up pilfering from one bank account to make some sort of vaguely impulsive purchase.
Our first financial adviser said that I was doing myself a disservice by keeping my money in silos because it made it harder to see how much money I really had. I was doing it as a way to keep from spending money.
Well, if it was supposed to work, then how is it that a girl who gets an allowance of $350/month finishes the year with exactly $190 in her bank account?! Fortunately our joint bank account is much healthier because the Chief Engineer is good with money management.
Obviously what I am doing is not working. Having multiple containers (literally and figuratively) for money I think gives me a false sense of security. Probably the way piles of stuff give my parents security. Does an empty room seem lonely and frightening to them? Clean rooms have people put in them. Friends, family. Maybe it's easier to forget that you don't have friends or get along with family when you don't have space to host those people.
Does a single bank statement with only $190 seem more scary than six bank accounts each with less than $50 in them? Actually, yes. One account is more scary because it proves that I have no fallback position. That means I have wake up to the fact that I must deny myself purchases in order to save. Therefore, I will do the scary thing. My goal for 2014 is to reduce my money silos to the following:
1. One wallet
2. No coin jars (use wallet instead)
3. One investment account
4. One liquid assets account
Today I closed two bank accounts and rearranged others. I have one checking account for myself now and no savings accounts. I have a single investment account for myself. I've consolidated my retirement accounts as much as humanly possible. Now I just have to get used to the idea that I can't hide from my inability to save anymore.
Do you have money clutter? What has worked for you?
My money is pretty consolidated, but I do have accounts across four institutions. I have two savings accounts and one checking account, plus two retirement accounts. But I've always preferred saving money to sending it, even when I was a little kid, so tat makes things asker.
ReplyDeleteI think you have some of the most consolidated finances I've seen! It's amazing how easy it is to collect retirement accounts. Thank you, U.S. tax laws.
DeleteI have a current account (I guess this is like a checking account- the one with the debit card attached to it!), a credit card (paid off in full each month), an e-savings account and an ISA. I am currently in the process of switching banks, though, as much current one had started charging me a fee for the current account.
ReplyDeleteI sometimes want separate savings accounts for separate things that I am saving for, but I have never actually got round to opening more than one savings account!
It is definitely a pain to open (and more to the point, close accounts). US banks take away the sting by offering monetary bonuses with new accounts. I wish they didn't! I will remember that the money doesn't really make up for the time and angst lost in the process of opening/closing the account.
DeleteHmmmm... well, personally I've never really been a fan of having different savings accounts for different purposes - I mean with the exception of IRA's, HSA's College savings accounts and other tax deferred stuff. The way I see it having separate accounts for separate things means that they're not really "savings accounts", they're "spending accounts."
ReplyDeleteThis isn't to say that I don't have a pile of different accounts at different banks, but basically I have all of my primary accounts at one bank, and once I've saved up enough money so that I don't need it for day to day stuff or emergency fund, I move it to a different bank - generally in a CD or something, the goal of which is to keep it reasonably liquid but make it harder to get to. The goal is to never touch that money again unless it's to move it into a better investment or use it for a major purchase (like a car or house or new furnace or something like that.)
I do have two separate checking accounts at my primary bank though. One is my main account where everything gets automatically deposited and all bills are automatically paid. That account has no debit card and the checkbook never leaves the house. The other checking account is for times when I need to use a debit card or check (Costco mostly), and I only keep a few hundred dollars in there so if the account gets compromised it's not a big deal to cancel it. I learned this lesson the hard way after my purse was stolen and I had to close my primary checking account - suffice it to say that I NEVER want to go through that one again!
The other thing that struck me about your post was this line: "...I must deny myself purchases in order to save." I used to feel that way until I read Your Money or Your Life and had a "come to Jesus moment" about my spending. If you're curious you can read all about it here:
http://ecocatlady.blogspot.com/2012/01/stationery-progress.html
I had always felt like you do... that spending money was "treating myself" and not spending would be "denying myself." But I suddenly realized that I really had it backwards. By spending money on things that I didn't need and that didn't really make me happy, I was actually denying myself the true reward, which is financial security and money in the bank.
Seeing "savings accounts" really as "spending accounts" is brilliant. You have a completely different way of thinking about money than I do. In many ways money is where my hoarded upbringing and my eating disorder meet. Saving to me is a diet mentality, which of course leads to a binge. Purchases buy (temporary) comfort and a way of taking away the pain of other things, or facilitating an attachment to good memories or a fantasy future. I read your entire post about the stationery and about your completely changed view of money. Yet again you've proved to me that change is possible. I'll be taking YMOYL out of the library ASAP. Incredible bit of self-analysis you did in that post.
DeleteWe have our joint checking, joint savings, and a savings account for each kiddo. The Husband has retirement stuff, but that's all done through work. My parents set up college accounts for our boys, but again, that's nothing we control. We've considered doing separate savings accounts for specific things, like our 10th anniversary trip in 2 years or for the camera I want. I think for us, it would work. I HATE touching savings. EVER. Just the sheer thought of taking money out sends me into panic mode. I think if we had a specific account (or even envelope) for a specific purpose, I'd be more inclined to use it for such. Otherwise, I think I'd never make such big purchases without flipping out.
ReplyDeleteI hope this new system works for you :)
"take money out of savings = panic!" is an awesome reflex to have. You're smart, you realize that it won't work for you! I didn't think it through and realize what my attitudes towards money are and how that affects having multiple accounts. What are your thoughts on allowances? That's what we currently do and I'm not sure it works either.
DeleteAnyway, one thing that someone should also do is to practice self-control, and avoid impulse buying. That’s usually the problem that most people find difficult to deal with. But I’m glad that you are able to show restraint on the matter. Cheers!
ReplyDeleteAntonia Pierce @ Cash Loans Today