Basic Financial Fitness: The Art of Stashing
I'm one of those people that got my finances in order after I hit 40 but am still living a paycheck-to-paycheck existence. Years of poverty and (former) poor decision-making skills have left me with an almost hoarding-like mentality when it comes to money. I'm always on my toes, knowing that I'm only one tragedy away from financial ruin. For this reason, I became a stasher. What is a stasher? Well, simply put, it's a person that squirrels away resources. In my case, it's money, although I do stash other things - largely snacks and other goodies I don't want my family to take off with. *laugh*
Basically, my stashing amounts to putting away little amounts of money in various places. For example:
1. I have a car loan at a different bank than my regular bank. My payment is under $200.00 a month, so I have $100 from each paycheck direct deposited to that bank in a checking account that I set up to pay the car loan. This means I have a surplus of money leftover each month. I also have a savings account there, so I transfer $10.00 each pay period from the checking to the savings while the rest accumulates in the checking. I've pulled from that account a couple of times for emergencies, so it's served me well already.
2. I have a hidden change jar in my house that I deposit all the change I accumulate. I will also throw a few $1.00 bills in there once in awhile. As I don't operate with cash much, it's a very slow way for me to build money, but that helps keep it out-of-sight-out-of-mind.
3. I have an online bank account that I deposit money into each paycheck. I opened an account with ING Direct years ago, but they are now Capital One 360 since Capital One bought them out. Again, I have a checking and a savings account there and I transfer money from my main bank there each paycheck. Trust me, it's not very much but it works. In my 30s, I would save roughly $5.00 a paycheck into my ING account, which I turned into an IRA through Vanguard in my 40s. Not too shabby!
4. The last way I stash cash is one of my newest: a Bluebird card. Touted as an alternative to banking, Bluebird is a collaboration between Walmart and American Express. It works like a cross between a gift card/debit card/secured credit card but has very little in the way of fees. You can direct deposit checks, pay bills, access cash free at many ATMs, and add money for free in various ways. I signed up online, they sent me a card, and I made my first "deposit" of $6.00 on a grocery trip to Walmart. I connected my debit card from my regular bank to it, and I add $10.00 here and there when I have a bit extra. The reason I got the Bluebird card is twofold: A. it's my way of saving and budgeting for a vacation, and B. it's my way of saving and budgeting for Christmas. I can save for one, get what I need, and then start saving for the other. When vacation or Christmas rolls around, I will have a debit/credit card that I can use for all my needs but I'm only using the money I've saved up for it. It's kind of genius. I recommend this card over a secured credit card or a gift card. There are very few fees which are only for not-normal situations, you get fraud protection, and you have the power of American Express.
And, that, my friends is how I stash cash. Do I recommend stashing cash? Yes, definitely. Stashing cash is a great way to "sit it and forget it", like I mentioned earlier it's out of sight and out of mind. This is especially true of the online savings account. I've talked about the benefits of having an online bank account before and it still holds true today. If you have an automatic transfer done each payday to your online account, you'll won't miss it after awhile and your money will grow without any real effort on your part. I literally did this with $5.00 throughout my 30s. Do I recommend stashing cash in numerous ways? Well, only if it works for you.
As always, adopt a smart money mindset and hash out a plan that works for you. Whatever you do, though, make sure you save. Savings are important.