The Idiot counts Coins

I have a few basic principles when managing my finances.

  1. Make saving automatic and transparent
  2. Make a savings account semi-difficult to access
  3. Spend less than you earn
  4. Always have some form of emergency fund that isn’t credit-based
  5. Invest in “Future You”


Allow me to elaborate,

“Make saving automatic and transparent” – Personally, having to go in and manually send money to my savings account puts me in a state of second-guessing myself.  Fortunately, most banks nowadays often have automatic transfers that can occur on a set schedule.   Better yet, you don’t even have to be alerted to the transfer if you don’t want to.  If I didn’t have it marked on my calendar, I’d never known it went through.



“Make a savings account semi-difficult to access” – For me, I split my savings into two accounts: A local account that I can make immediate withdraws in case of an emergency, and a high-yield savings account at another online bank, unlinked to my bank.  I only touch this account in extreme circumstances.  I purposely left a technical hurdle (in my case, linking my bank accounts together) in place to avoid rash decisions.  In addition, the transfers from one account to another takes between 48-72 hours to complete.  This allows me to consider if the purchase is worth the wait.  If I need the money immediately, I’ll use my credit card and immediately pay it back with my savings.



“Spend less than you earn” – This is a no-brainer, but it bears mentioning.  You cannot build wealth if you spend more than you earn.  It’s easy to slip from one state to another, so a periodic check of your income/expenses radio is vital to make sure you maintain a healthy financial status.



“Always have some form of emergency fund that isn’t credit-based” – Some people I know rely on a credit card for emergencies.  While it’s better than nothing, building an emergency saving fund is critical in today’s world.  I’m still building mine as we speak.  My goal is at least 3 months of my take home pay.  It’s a lofty goal, but once I have that saved away it its own savings account, it will be untouched.  The satisfaction of knowing I have some breathing room after a job loss will be a huge burden off my shoulders.



“Invest in ‘Future You’” – No one is going to care about your future more than you.  Therefore, your retirement should be a priority as soon as you can draw a paycheck.  I chose the Roth IRA when I was still in the service, and continue to use it to this day.  It’s comforted knowing that when it comes time to retire, the money in that account can be withdrawn tax-free.  I also contributed to my contracting company’s 401k program.  My company offers matching up to up to 6 percent (granted, it takes some time to become vested).   I urge anyone who works for a company that offers a 401k to look into it.  If your company offers matching, you’re essentially getting a pay raise without asking for it.


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