After Alexander Lowry got married, he and his wife made a list of financial goals. First, they wanted to buy a house outside New York City, where they lived, and eventually start a family. And they knew that their lifestyle would require a family-friendly car.
Lowry and his wife, Rebecca, are planners. A full three years before their anticipated move, the couple read piles of safety reports about cars and decided what they wanted to buy—a popular midsize sedan. Lowry wanted to buy the car in cash to avoid interest payments on a depreciating asset. So he and Rebecca opened a savings account with their bank to help them build up the funds for the car
“It was great time for us to step back and see how we needed to prioritize,” Lowry says. The couple took stock of their cash flow, cut back on expenses like new clothes, and directed that money toward their savings goals instead. “We subscribe to the philosophy that every dollar matters,” says Lowry.
The couple felt that a dedicated savings account where they could save for their car was the right way to go. They also have separate savings accounts for their other financial aims, such as building an emergency fund. Each is funded with automatic transfers from their checking account.
“You have a targeted amount for each goal and watch the money in each account increase,” Lowry says. “Funding the account automatically makes that easy, and watching your savings get closer to your goal is really encouraging.”
The couple now lives in northern Massachusetts, where Lowry teaches finance at a local college. Their first child is on the way, and they bought the sedan they wanted—in cash—last year.
Having achieved some of their aims, Lowry and his wife continue to look to their future. They’re saving for things they’ll need for the baby, and are even thinking ahead to when they’ll need to replace the car.
“Start small and build from there, because saving gets easier the more you do it,” Lowry advises. “It’s like a snowballs it rolls downhill, it grows bigger and bigger.”
Austin Kilham is a Los Angeles–based writer and editor. He writes about personal finance, retirement, business and investing.