Tuesday, June 21, 2011

Starting Out With Savings... Part 3

Over the last few days, I have been breaking down our savings problem. Now I'm going to explain how we have started to take control of what we are spending and analyse our habits.

I think that this is an area where we as Christians have to be careful, prayerful and honest. It can get a bit addictive, hoarding away money for a 'rainy day'. That is not helpful. 

It's important to examine your heart and seek God's Word through the scriptures to find the example of wise money management that God sets out for us. 

This includes things like tithing, not letting money rule our hearts, choices or service, being gracious and giving with our money and seeing money as a blessing from God, not a right that we have in life. There are people out there who have done a much better job of writing about this than me, so take time to figure this out yourself. 

Right, so now we knew where the money should be going each week, we needed to have a system for ensuring that the money was in the right places at the right times. 

This is how we are going about this:
  1.  Looking at our credit card statement and figuring out what it is we really used it for. For us it was holidays, the occasional dinner or grocery load that was out of routine, and online purchases of hobby or gift items. 
  2. Examining where else these purchases could have been allocated so that the credit card would not be used. Then we moved those payments. For instance, I had a weekly fruit box that was coming off the credit card. I moved this to our everyday account.
  3. For online purchases, we have now set up debit mastercards.  This means we can still order as though it is a credit card, but the money comes from our own account and we can't overdraw. If its not there, we can't spend it. 
  4. I have changed my every day account to be the one that Awesome uses, so that the billing/direct debiting account is left alone completely. This means that there will be no more savings raiding. The bill money will sit untouched until the bill is directed from the account. This is probably the most important step. When all your money is together in one place, it can be very easy to 'rob Peter to pay Paul' as someone once said. This has to be the first change made. There are lots of products available from banks to help with this. We chose the fee-free internet only accounts available from ING Direct. 
  5. For me, I need to start paying attention to what I'm buying, so each week, Awesome will now withdraw the cash from the account (although I have a debit card for this too just in case) and I will put it into cash envelopes. More on those later. 
  6. Awesome doesn't like cash, so he will continue to use the card, but once the allocated money is gone from the account, we will both have to wait til next week - instead of hitting up the credit card.
  7. Once we have done this for a couple of months, we will be cutting up the credit card. I'm looking forward to that :)
You can probably already see how we got into this mess. But we are confident that we are heading towards a better and more accountable system for both of us. 

Tomorrow we are having a tiny break from the money series, just for fun. Tune in for something that is actually quite embarrassing  Thursday and Friday will be the final posts in this series. 

While you are waiting, why not share your long-term goals for savings? 


  1. We have just started our new strict budget and we both have an ING account (we share all money obviously but this means we have two accounts to save for seperate things so we know what is what). We keep a log book for all money we spend... it's working at the moment as it shows us just where our money is going! xxx

  2. I'm still in the contemplation phase regarding budgeting, and John is still in the unaware phase haha (since I haven't spoken to him about it). I think this is something we should really talk about soon since we're still not really getting ahead.

    Thanks for these posts, they're really thought-provoking! :)

  3. Avoiding using a credit card is great. They can be such a trap. Makes you feel like you have more money than you actually have! I use a Visa debit card instead of a credit card so I can still shop online but with money that actually exists!

    My husband and I have a joint credit card but with a minuscule limit. I never use it because my husband does, and I never know how much has been spent on it. And of course, if you go over your limit,the card doesn't decline, it let's you spend the money then charges you a massive fee. I would much rather it just declined. Another credit card trap!

    Anyway back to your question, our long term savings goals are to invest in property without getting into too much debt. I want to make sure our financial commitments aren't massive, because firstly I think it's God's money and needs to be used for His purposes, and secondly because I think that financial stress would be awful. I don't want a massive mortgage hanging over my head. Too much pressure!

  4. TIH - I think that logging things to see where the money went is an excellent idea. While we are trialling this new system, we are collecting recipets and will go over them at the end of the week.

    Lozzz - It took a very long time for us to be on the same page with this stuff. Its difficult to agree on things, but I found having a goal (like buying a house) was the key motivating factor for Awesome.

    Sophie - I agree - seeing friends who couldn't make their mortgage payments during the GFC was awful - it can be so easy to get in over our head. We have already checked out one house that was over our budget. They aren't real numbers, they are paper numbers so you do convince yourself "oh, we could just borrow a little more..."