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Money Habit #14 – Create A Special Impound Account for Big Expenses

Wealthy people don’t have financial surprises.  They plan ahead for big cash outlays. 

Whether it is for a house remodel, a daughter’s wedding next year, a big vacation soon, or just paying your taxes in April, you need to set up a special “Impound Account” to cover big expenses before they are due. 

Think of any large cash outlay you’ll need to pay for in the next year.  Add the total of all of them, and divide by 12.  That’s the amount of money that needs to be saved in your impound account each month. 

Then, when the bill comes due, the money is there.  You won’t have to scramble to find the funds, or be late with the payment because current cash flow won’t cover these “surprise” expenses.

Habit #15 next – Mindful vs Mindless About Spending

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