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Reader Question: I Don’t Have Cash For The Big Things – HELP!

Posted on the 26 February 2013 by Ncrimaldi @MsCareerGirl
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Hi Nicole,

I was wondering if you had any advice on how to save money in your daily life so that you have a reserve of money to spend on things that you actually need – such as contact lenses, a new phone, pair of eye glasses, etc. I find I rarely have money ‘on reserve’ for these type of expenses. Help! 

-Anna from Chicago

Hi Anna,

The first question I’d ask you is, do you have money for the little things?  For example, are you the type that goes out to lunch during the week, buys a lip gloss after a bad day at work or who just can’t pass up a last minute Gilt City deal?  After I racked up some credit card debt myself, I realized that the “little things” were hijacking my financial situation. Those impulse buys at LOFT (you know, the ones where you leave telling everyone how much you got for $100) REALLY add up over time.  It’s ironic, but those of us who get “high” from a good deal are probably the ones with the biggest problems. Seems counterintuitive, right?

My guess is that you have a college degree, a job and good intentions.  Therefore, this is a situation you need to change.  In order to do that though, you have to figure out how you got here in the first place.  Here’s what I would do.

Step 1: Get a free account

Don’t do anything until you find out EXACTLY where your money is going.  Mint feeds all of your debit and credit card transactions into one place and creates a pie chart of where your money is going.  You may be shocked.  I know I was…

Step 2: Adapt the “Power of 3.” 

I learned this trick from Ramit Sethi over at and it has been a life saver.  Why?  It takes the guilt, uncertainty and the “shit, did that bill clear yet?” out of your financial situation. After finding out how much you spend in different categories, split your money into 3 different bank accounts.  Yes, you heard me right, go to your bank and get 3 accounts.

  • Account #1: Operating Account
  • Account #2: Checking Account
  • Account #3: Savings Account

Here’s an example of what this could look like for someone who brings home $1,200 per paycheck.

Note: this spreadsheet represents a pay check after taxes, benefits and 401k contribution are taken out.  It assumes you are paid on the 15th and last day of each month.

Screen Shot 2013-02-25 at 9.53.30 AM

Obviously you can play around with these numbers depending on your situation.  Just make sure the bottom number isn’t greater than your pay check!

  • In your first paycheck of the month, put money in your operating account to fund the first chunk of your fixed costs: utilities, groceries, credit card payments, student loans.  
  • In your second paycheck of the month, put all of your rent money into your operating account.  Your fixed costs are now accounted for.  No drama mama.
  • Then pick an amount that – no matter what – you will commit to putting in your savings account.  Start small, even if it’s $25. It shouldn’t squeeze you or cause you to use your credit card. Remember, you can always increase this amount.  Over time this is the account that should fund your new iPhone or glasses. If you have leftover money in one of your other accounts at the end of the pay period, sweep it over to your savings.
  • Note that I added a “gifts/weddings/travel” line item.  If you know you have lots of extra expenditures coming up this year, make sure you’re funding those expenses and putting money aside well in advance.  If you plan ahead you won’t have debt problems.  I recommend putting this money in your savings account so there’s no chance you don’t spend it on an unusually high heating bill or another one of those “too good to be true” sales you’re so crazy about.
  • The rest of your money goes into your checking account.  This money is pure entertainment and pleasure.  Do whatever you want with it and dont’ feel guilty!  Shopping, manicures, drinks, lunch, concerts, whatever.  This bucket funds your fun and should give you a huge sense of freedom – no worrying about if your bills cleared or if you saved enough this month.  All that is already taken care of and doesn’t affect this account.

 Step 3: Decide if you need to make more money.

In this example, there isn’t much money left over after bills for spending or savings.  It might be time to pick up a side hustle, ref sports games, babysit on the weekends, teach a class or write blog posts for a local business.  Not only will you network, you’ll develop new skills and be on the road to financial freedom without having to cut lattes and manicures like so many other unrealistic bloggers recommed.

Hope this helps and let us know how your journey to savings goes!


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