Monday, October 16, 2006

The Automatic Millionaire

Ben likes to read books about business and financial planning. I prefer to read about homemaking and family management. Our marriage is good because we each have different areas of expertise and responsibility, and we are learning to recognize our own strengths and weaknesses.

In terms of finances, this year Ben and I have made it a goal to build up our savings accounts. We would like to have a comfortable buffer of savings. Our financial planner suggests we save enough to cover three months of living expenses. Because Ben is self-employed, this makes a great deal of sense. His business has been doing very well lately, but if our savings account is healthy we do not have to worry when a slow month comes along. (And they always do.)

Ben and I have discovered a (well-known) secret for achieving our financial goals: we set up automatic withdrawals from our chequing account into savings. We opened a high-interest savings account and every week we transfer some funds. We pay ourselves, just like we would pay any other bill. It is amazing how quickly the savings can add up!

We like the automatic withdrawals because we don't have to think about them. The money comes out and we hardly miss it. If money is sitting in our chequing account we will spend it. The automatic withdrawals force us to be disciplined.

We also have started the habit of depositing any "extra" money into our savings account --- money we receive for gifts or unexpected tax credits. We figure those "extra" funds were never included in our budget anyway, so we won't miss them if they go into savings.

It's kind of fun to watch our small nest egg grow. A little bit here, a little bit there. Now that we have some momentum going, it is easier to envision our financial goals becoming a reality. Maybe some day our tiny nest egg hatch a giant dinosaur!

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