Saturday 29 September 2012

Organising Finances to use the 'Cash Stash' Savings System

This week on the blog, I have a five-part series which reveals a budgeting method that I have used for many years, which helps me to achieve my financial goals.

In order to run with this system, there are few things that you need to get organised first!  So, I thought I would share these with you today, so that you can get your finances organised, ready to try this new savings method, that recently helped me to save $300 for an Expedit bookshelf for my study makeover, in just over one month!  I didn't go without anything, I didn't do extra work to get more income, I simply managed the money that I had budgeted using the Cash Stash savings system!

Firstly, it is best if you have a budget set up.  This system really works best if you partly operate your money system using cash, which I certainly do.  I get paid fortnightly, withdrawing all money that I have allocated for groceries, petrol, presents, spending, and spend the cash over the next few weeks, rather than swiping my cards.  I have labelled sections in my purse, so that I can keep my money easily organised to manage this system.

I also have multiple accounts set up with my bank, to manage all of our other finances - bills account, presents account, savings account and then our loans.  All of this gets managed online, with direct transfers occurring each fortnight when I get paid.  I also pay the bills online, fortnightly, using BPAY, if they are not set up for direct debit, out of the bills account.  And I pay for presents I buy using my Mastercard, which gets paid off each fortnight, using money transferred from the presents account.  

At the start of the year, I look at our finances and set us a long-term financial goal for the year.  This year I had 3 long-term goals.  We achieved one of these earlier this year, we are still working towards another, and the third goal is simply to keep the Mastercard at a balance of $0 - so far so good! 

Examples of long-term financial goals we set are 'To pay $xxx amount off the home loan' OR 'To get the loan under $xxx' OR 'To save $xxx'.  Goals need to be achievable, so set yourself dollar amounts - it is much easier to work towards a concrete amount.  

I then set automatic fortnightly repayments/transfers to our accounts, based on these goals.  So, I don't really have to think about this now, I just monitor that the repayments/transfers are happening each pay week, and I simply watch the savings go up and the debt go down!  

Next, you need to set yourself a short-term goal.  The Cash Stash system will help you to save money - how much depends on how committed you are to the cause.  I usually use my Cash Stash to pay for furniture or make-overs in the house, that I otherwise can't see how to pay for without dipping into our savings account.  My Cash Stash helped to fund my laundry renovation last year, and it is funding my study make-over this year.  

So, you need to work out what these savings are going to contribute to - it might be to help pay off some debt that is lingering in your life, it might be for a holiday or a home renovation, it might be for a big ticket item that you otherwise can't see how you would pay for, or it might just be that you want to build up a little safety net for a rainy day!  A goal helps to keep you on track, and it is so fulfilling when you actually achieve your goal :)

Thirdly, you need to set yourself an envelope/coin purse/section of your wallet for savings, and keep it in your handbag all the time.  I use this zippered section at the back of my purse.

Finally, make a secret place at home that you put the money at the end of each day/week/month.  It is much safer to store the money at home, than to carry it around with you.  Not only is it safer at home so it doesn't get lost or stolen, but it is also a bit of a temptation having all that cash in your bag, and you wouldn't want to be tempted to spend it!!

I use this envelope, which I write my short-term financial goal on, to remind me each week of what I am working towards.  Having a visual really helps to keep me on track!

Phew!  That seems like a lot, but in summary, these are the four things you need to do in order to get started with the Cash Stash system I will be posting about this week:

1.  Set yourself a budget, using long-term financial goals to guide your distribution of money.
(Note - This step is not mandatory, but would be really helpful!)

2.  Set yourself a short-term financial goal.

3.  Create a savings pocket in your purse/handbag.

4.  Create a Cash Stash envelope to hide in your home.

Make sure you pop by tomorrow to see the first step to creating your very own Cash Stash!


My Pigeon Pair said...

This is a great post Cass and I cant wait to share it! I posted about the way we use a "Cash envelope" system which is very similar! It has definitely helped us to save money!

Cassandra said...

Thanks Larissa! I will make sure I direct everyone to your post for more tips too :)

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