What is the best way to save?

Question

My husband and I are a young couple, he's 23, I am 21 and we have a baby on the way. Saving was easy before but we just bought our first home. We have 1800 in bills and about $400 a month in living expenses. My hubby gets paid a commission. His weekly checks can vary anywhere from $650 (his base pay is 700/wk) and can be as high as 1200, and average 900. According to my math, we should be able to put back at least 800 a month. My hubby is bad about spending money. I don't want to be completely rigid, but I need to set some limitations. Right now I put everything in savings and only pull out enough to cover our bills and expenses, which puts us saving a little over $300/mth after my hubby spends the rest. How can I set up a savings plan so that my hubby understands it is not to be touched? And should I try to put back a set amount every month or do a percentage of each check since they vary? Advise, please!

Answer 1

I agree with the previous answerers who suggest putting a set amount into your savings account every month first.  You are very fortunate to actually have some money left after you pay bills to put into a savings account.  Take advantage of the good position you're in and start saving!

Money can be a sensitive issue in a marriage, I know that from personal experience.  Take the opportunity to discuss your household's financial habits with your husband.  Talking about the future and why you want to save will help you establish common goals and is a great opportunity to strengthen your relationship and secure your future.

Best of luck to you!

Answer 2

I find having something specific to save for helps bring everyone involved on board with the idea.  It took me quite a few years to save for a Mercedes Benz convertible for hubby's 50th birthday, but having that picture of the bright shiny red car with the top down on the garage door every time hubby pulled in, helped him remember every month what we were saving for.  I believe in saving a set amount per month and paying myself first, so I make the transfer into savings and everything else gets paid after that.  I find that I "make do" with what I have better that way.  I also put every dime of unanticipated money I receive directly into savings as well.

Answer 3

Set up the savings account at a different bank than your checking account. And online back would be perfect for this, such as ING Direct, Emigrant, or Etrade. They get higher rates than brick-and-mortar bank savings accounts, and the money is far enough away from your regular account that it obviously isn't meant to be touched.

Plus, it takes a few days to transfer the money back from the online savings to your regular checking, so your hubby will have a few days "cooling off" to think about his purchases while waiting for money to transfer.

Answer 4

Firstly the two of you need to make a budget that you BOTH agree on.

1. A budget is not a punishment, it is a tool that will allow you to never have to worry about money ever again. It should list EVERYTHING especially those annual, biannual, quarterly, and occasional expenses like car registration, insurance, etc. Put in an Emergency Fund item and a hubby/ wife "blow it" item with set amounts. Basically you each have an "allowance" that you can choose to spend however you please but only that amount and no more. Base your budget on your hubby's base pay and not the commission. If you start viewing the commission as "extra" it will be easier to save, at least part of, that money. Give every dollar you are going to bring home the name of where it is going. Add an "emergency fund" category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don't even have to worry about it. You must cut your spending and live on less than you make.

If you have any debt (except the mortgage) pay it off as quickly as possible, hopefully before the baby comes. Here is a way to do that:

2. Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example:

To start :

Debt #1 (highest interest): minimum payment+ extra payment

Debt #2 (middle interest): minimum payment

Debt #3(lowest interest): minimum payment

Debt #1: paid off

Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment

Debt #3: minimum payment

Debt #1: paid off

Debt #2: paid off

Debt #3:Mimimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment.

That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have.