Saving With The Lump Sum Method

By Martin Lukac


There are so many things that we need to be saving for. You need to have an emergency savings, special goals saving, long term saving and all the other savings accounts for your future. These savings can result in a lot of different accounts. Besides, most people find that they have a hard time getting to where they need to be with just one savings, not five.

Most advisors will tell you to spread your savings out among all of your different needs. This can result in a lot of savings accounts. And yet, you still have the same amount of money.

The lump savings method might be a good solution for you. You just open one savings account. It can be low interest, but needs to be fairly available. Put all of your savings accounts into it for the entire month (except for retirement investments).

How much do you need to put in it? Take all of your goals into consideration. You know that you need an emergency savings. If you are already have it then don't worry about it. If you don't, set yourself a time limit and decide how much a month you should invest. Also consider all of your non-monthly bills. These annual bills can really take a bite out of your budget. For example, if you know that you spend $300 a year during the winter on propane, divide that amount by 12 and put $25 a month towards your propane savings.

Add all the monthly savings up and then put this in your account for the month. I suggest that you keep a list of how much is going towards each savings goal. After a few months, look at what you have saved. Are you close enough to your emergency savings to skip the rest of the categories and put it all towards that this month? Do you need to change some amounts?

This is where you list comes in handy. Put things in order of priority for you. Choose what it most necessary and put a little more towards it. If you can, devote all you can and then do the others in the next few months. Once you have your emergency fund built up, you can take that out of the savings account and put it in another account and forget about it. Then you move on to concentrating on other savings goals.

This really helps you save time in that you aren't writing out five checks to your different savings accounts and trying to manage it all. If you stick with it, the money will be there. You just have to keep track of what you need to save and what you are saving.

This method isn't for everyone. But those with little time could actually benefit from it. Many people find it easier to keep saving when they see the lump sum growing, as opposed to a lot of little accounts barely moving up.

The idea is that you are saving. No matter the method, the saving is the important part. Do it regularly and keep with it. In the end, you will find that it really pays off.

Martin Lukac represents http://www.RateEmpire.com, an Internet consumer banking marketplace. RateEmpire.com is a destination site of personal finance, investing, taxes and mortgage rates. RateEmpire.com provides mortgage guides and financial rates and information. RateEmpire.com also operates a financial portal #1 American Financial, found at http://www.1AmericanFinancial.com and San Diego loan portal http://www.LendingSanDiego.com