Decrease Stress by Separating Funds
It is well known that to accomplish a goal, you need to set a plan and then execute your plan. Over the years, I’ve watched people start home renovation projects and then try to attain financing for the project once it had already begun. I’ve seen people go on vacations and then try to get a debt consolidation loan to pay off the credit cards they maxed out during their trip. Personally, I like to know where my finances are for every project, every trip (big or small), and everything in between.
Recently I added a shop to our home. Before doing any of the work, my first step was to decide what my budget was and decide how I would pay for it including attaining the financing for the project. I then created a spreadsheet to keep track of the budget. Although, I knew the financing was going to take a while to be completed, I refused to start building because I knew starting the project would add additional stress if the financial side did not go as planned.
Another action that has taken the stress out of our finances has been creating separate accounts for different events or purchases. My wife and family love big Christmas’s. The first couple years my wife and I were married, we would spend money out of our regular checking account, only for me to be stressed out at the end of the month, because there was too much month and not enough money. After looking at the problem, I decided to open a separate account just for Christmas spending. I then decided how much money was needed to allow my wife to have the Christmas she wanted and I created a budget. Once I set my plan, I executed my plan by putting money in that account until I reached my goal. This allowed my wife the budget she needed and kept our Christmas funds earmarked just for Christmas and kept it separate from regular funds so we could easily track how much money we had spent on Christmas. It definitely took the stress out of Christmas shopping!
Over the years, I have implemented this process for other special events and projects whether it be a small weekend trip or a large event such as a week-long vacation. I estimate the costs of hotels, any major ticket items such as airline costs or theme park costs, etc. and then start putting money into an account that is specially named “Travel Account.” When vacation time comes around, I know if we have the money needed and we don’t have to go into credit card debt to pay for it. And although we might not have a special trip planned, having a separate account allows us to put extra money (money we didn’t expect or any other funds) we have into the account without spending it from our regular checking account.
By no means am I perfect with money; however, separating funds has allowed my family and I to plan for the things we want to do and know whether we have the funds or if we need to wait a bit longer. This might mean cutting back on eating out, avoiding impulse buys, cutting back on small trips to save for a big one or not going on vacation at all. However, in the end we have a less stressful vacation and holiday, because we know our budget.