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Frugal with Money Saving Tips with the 2-Saving-Accounts-Strategy

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frugal with money 2 account strategy

Be smart and learn how to save money correctly without being tempted to spend it. Our frugal with money two types of savings accounts strategy is perfect for moving not-spent funds out of sight. Way too often, if the desired monthly saving amount is left in one and the same account, the temptation to unintentionally spend it will increase. In this post, we will introduce a very simple way of avoiding this problem.

What is idea behind the frugal with money two types of savings accounts strategy?

First, by choosing two different accounts, you have a good Feng Shui Yin and Yang balance: Your spending account constantly decreases throughout the month, as the second saving account will always increase, resulting in a perfect universal balance of Yin Yang. Secondly, this extreme money saving tips makes is so easy to put money aside regularly.

The principle idea behind this frugal with money strategy is to strictly separate your consumption spending from your wealth building (money savings). Many people try to make an effort to have some money left over for savings at the end of the month. However, this strategy most often fails as either all the money is already spent and secondly, psychologically speaking, it is very difficult to pay attention to not overspending throughout the month. As a result, frugal with money savings is not fun anymore and leads to negativity and emotional struggle.

Automate your savings

In order to tackle and avoid this nuance of negative emotions, the best option would be to automate the savings by using two types of savings accounts. The main advantage of this frugal with money trick is that you will not notice that the money has vanished from your spending account. As a matter of fact, you can see it as a monthly deduction like rent (mortgage payment) or paying the utility bills automatically. By adhering to this extreme frugal living tip, you never have to worry about putting money aside for savings.

The best option for doing this would be to set up a repeating monthly money transfer to the savings account the day after your salary is credited to your spending account. Let’s summarize:

Read more: 88 budgeting tips for families, young adults

Our extreme money saving tips for the 2-account-strategy Summary:

  • Create two separate accounts: one for spending and one for saving.
  • Schedule a monthly money transfer of the desired savings amount the day after your salary is credited.
  • EXPERT TIP: To avoid impulsive spending, do not obtain a debit card for your savings account. However, obtain online access to the account to monitor the savings process.

The psychological effect of being frugal with money and how to use the savings

money psychology

The psychological effect of this frugal with money saving strategy is nothing more than PAYING YOURSELF and pathing the way to your future financial freedom. For example, if you pay your electric bill, you pay the electric company. If you save money, you pay yourself. Please remember that you and your family are the most important people. So, why not pay yourselves, right?

This two types of savings accounts strategy divide your spending from your savings. The spending account’s only purpose is to cover all your monthly fixed costs, such as rent, but also covers all the variable expenses such as going out to eat, clothing, or fun day trips. Without having a guilty frugal with money conscience, you can spend all the money on your spending account to zero. Because you’ve already done your part by saving money. In your savings account, the money will accumulate month over month from a small snowball into a big avalanche.

How to use your savings most efficiently?

There are two ways to use your money savings to snowball:

  • Use a regular savings account which has a good interest rate.
  • If inflation is high or the interest rate is low, do ETF saving and take advantage of the dollar-cost-average-effect.

Please do not use the frugal with money savings account for fund correlated to repair cost etc.

Let’s summarize quickly the frugal with money strategy using two types of savings accounts one more time:

You should have one spending account where your salary is credited to and use it for your extreme frugal living. You should use this account for all your fixed and variable monthly costs. In addition, keep some funds in reserve for unexpected repairs. Right after your salary is credited, make a recurring automatic money transfer to your saving accounts for the desired amount to save.

On the saving account, you can either accumulate it or use it to cost-average invest in a good index ETF. On many financial websites, the recommended savings percentage ranges from 10 to 15% of your monthly income. In the savings account where you either have a debit or credit card attached to it, slowly money will accumulate month by month. Please make sure to choose a free online checking account to avoid any unnecessary bank fees as being frugal with money is the key. Using the 2-account-strategy not only efficiently lets you save money, you are also always in harmonic balance with the Yin Yang principle of Feng Shui.

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