Saving for Black Swans 

We're halfway through 2020, and the exhaustion is real. I don't know about you, but I need a vacation, literally anywhere - as long as it's not in my house. 

2020 in a nutshell. With the nutshells probably between the pillows.

But with the re-opening of the world, comes a re-opening of the wallet. And while the stock market seems to be recovering, it’s clear no one really feels comfortable breathing a sigh of relief just yet - as a new black swan could be just around the corner. 

In fact, it was recently reported that Americans started saving 33% more than before, due to economic uncertainty. This all while considering that the American household income actually shot up 10.5% due to government intervention. 

If you’re behind on the savings game, we got your back. Here are a variety of proven methods you could start saving today, just in case 2020 has extra things in store for us. 

What you’ll need

Let’s break it down 

For this post, we are going to work with the 50/30/20 method of budgeting. We are going to take your monthly (after-tax) income and break it down. 

You might be in a place where your 50% isn't enough. That's totally OK. Start deducting from the other two, for example, 60/30/10. If you have anything leftover from necessities or wants, add it to the savings as it will help pay back debt quicker.  

It might also be much easier if you open a Savings account, so you can keep this cash (and its transactions) separated. 

Choose a method that you like and start!

The Envelope Method

This is for all the cash lovers out there. After all, it’s easy to get detached by the value of your money when its just a number on a screen. 

Leave your fixed necessities like rent and bills on digital auto-payment. Take out your wants budget in cash. 

Get multiple envelopes and label them based on their categories, such as "Restaurants," "Groceries," "Shopping," etc. — as a bonus, you should also write how much you're putting in it. After an expense, put the receipt inside with the cash. This keeps everyone accountable.

Once it’s empty, you’re done. Zip. Nada. You spent your allotted amount. The rest of your money is sitting in a high yield savings account or in an automated checking taking care of necessities, and it shouldn’t be touched unless you have an emergency. 

The Treat Yo’self Method 

Here's your savings account.

But not the way you think. You’re paying your savings first here. With every paycheck you get, immediately take out the 20% and directly move it into your savings account. What you have left in your general checking account is what you can use. 

If there's extra left over at the end of the month, you might not be saving as much as you should. But if you feel you are, well, I guess buy yourself a beer and pat yourself on the back! 

Zero-Based Budgeting

This is for the planners! Open up an Excel sheet and give every dollar you receive monthly a job until you reach zero. Your rent receives a certain amount of cash. Your groceries receive a certain amount of cash. Your emergency fund receives a certain amount of cash. 

When people talk about a second wave, they aren’t talking about your planned future trip to Mexico, but yes, that would also receive a certain amount of cash in this system.

When you’re out of money to assign, you’ve successfully given them all jobs. Make sure they don’t stray from it!

Be realistic with the effort 

Some of these systems require little to no effort, while some - like the Zero-Based system, probably works better if you crack open an Excel sheet, or one of those spiffy budgeting apps, and check in weekly to ensure you’re on schedule.  

Whatever you choose, making sure you follow through is the most important part. So make sure it’s a method you feel you could keep pace with instead of a reason to feel guilty due to procrastination.

That wraps today up - I hope this post changed your day a little bit. If it didn’t, vote on the next topic so we can make sure you’re being taken care of!