By Mikelann Valterra

I love feeling good about saving and investing for my future as much as the next gal. But in day-to-day life, the greatest money stress happens when people end up with a huge credit card bill they can’t pay off like they generally can. It eventually happens to everyone–that month with car repair AND airplane tickets on the card.

Enter the life-changing power of short-term savings.

Do I sound dramatic? Maybe – but the power of utilizing this technique can literally end financial stress.

Do this: set up a savings account that you call short term savings. This is money that is meant to be spent. This is not your safety net, house down payment money or retirement. It’s money you save each month for all those large but variable expenses that always eventually happen. Some people call them periodic expenses. (Those expenses that “periodically” hit, as opposed to all your regular monthly spending.)

Now set up an automatic transfer of between five and 10% of your net paycheck or income, from your checking account to this short-term savings account. That’s it. But consider automating it. Put in 5-10% of your monthly net pay.

Hot Tip:

If you are both a homeowner and have children, go closer to 10%, as these two things tend to generate larger variable expenses that child-free people have or then renters need to deal with.

When you have a heavy expense month and are hit with that huge credit card bill, transfer money back in from this short-term savings account to pay off your credit card charges.

This one strategy of automatically transferring money into short-term savings can lift you out of financial anxiety.