Lots of times money comes into our hands, wallets, or bank accounts, and finds its way out again just as quickly. I’m talking about that birthday gift from Grandma or the rebate check that arrived in the mail. What was it used for? A drive-thru meal at McDonald’s? Snacks at the movies? Maybe you have no idea?
All of us have that kind of “found money” that makes its way into our lives. Often times it was unexpected or forgotten about until it arrived. Therefore we have no real plan for it. Here are some common examples of found money:
Gifts
Rebate checks
Insurance reimbursements
Reimbursements of other kinds
Interest on bank accounts
Income from second jobs
Items sold (eBay, garage sales)
The possibilities are endless and chances are you have some unique sources of found money that aren’t listed here. Rather than let that money disappear into the black hole of your checking account, here’s a plan for putting all that “found money” to work for you:
1. Choose a financial goal to focus on. It could be paying down debt, saving, or investing. Be specific! If your goal is to pay down debt, choose a particular credit card or type of loan that you want to be the focus. If building savings is your goal, which kind of savings is at the top of the list? An emergency fund? Or saving for something fun like a vacation or new furniture? Finally, an investing goal needs to be specific as well. College? Retirement? You get to decide!
2. Designate a separate account where the money will be held. This could be an actual physical account at a bank or credit union. You might want to consider the high interest rates that online banks are paying on your savings balances right now.
If you don’t want to open up a separate account, but rather keep the found money in your existing checking or savings account, you’ll need to be especially carefully about separating out your found money balance. You can do that with a money software program, like Quicken or Money, or by simply keeping a tally in a spiral notebook, but the goal is to not let your found money be swallowed up by day-to-day expenses.
3. Let your found money grow to a number that you’ve chosen. The number can be as low as $5 or $10 or something larger, like $100. When your balance reaches that magic number you can transfer it to whatever goal you decided on in step 1.
4. Look for new sources of found money. You’ll soon discover that it can be quite a rush to send money you didn’t know you had to pay of a credit card or save for a vacation. You may find yourself setting aside your coupon savings or scouring the house for things to sell on eBay. Rise to the challenge and you’ll be achieving your goals in no time!