One Goal, One Savings

Gabi and I have been friends since the dawn of time. You will never find any two people more opposite than we are. This one distinction is probably the reason we have been friends so long. Gabi uses a savings technique that is impressive in its simplicity. I call it the One Goal, One Savings Method.

Gabi is very proficient at saving for her retirement through her employer. She also tucks away a little of each paycheck and if a windfall comes her way, she uses it for debt reduction, savings and a tiny reward for her hard work. Aside from retirement, her savings is in one huge lump: no subaccounts, no travel fund or emergency fund. It is one lump sum sitting in the bank and it would practically take an Act of Congress for her to make a withdrawal.

So when small, non-emergency things crop up, Gabi had to find ways to fund them. "I want to pay for something quick, so I have to think and act fast," she told me recently. "This isn't long term goals or emergencies so I'm not tapping my savings. I needed to come up with another way."

So how does she do it? Let's look at her gym membership. Gabi felt like her membership fee was too high for the limited use she required. After shopping around, she found a gym close to home that suited her needs and was having a limited time offer of  reduced membership costs. She was especially pleased that paying for the entire year netted even bigger savings. Her problem? She wasn't touching her savings for the money. Her solution? A quick yard sale. Gabi made enough to pay for a year's membership in full (no recurring fees) with some left over. She has used this approach for getting plants for her yard (helping her elderly neighbor with a project), selling a small piece of furniture to pay for a bridesmaid dress and tutoring a student for his finals to earn enough for an art class.

Many of us are trying to reduce debts, fund everything from retirement to braces and keep up with the high costs of living. I like Gabi's way of achieving those 'extra' goals. By telling yourself you need x amount for a single project and focusing solely on that amount, you have a goal that inspires you to act quickly. At the same time, you are still contributing to your savings without having to stop and pay for your special project or dipping into those hard-earned dollars.

I've begun to implement the One Goal,One Savings method myself. I have picked my project. I've calculated how much I will need and made a list of what I can do to get that money fast. I'm close to the amount I need and it feels wonderful that my savings is still safe.

How do you pay for projects without tapping your savings?