I was having a conversation with my 5 year old tonight about his piggybank and he said he wasn’t ready to go to the bank yet since he didn’t save enough money yet. That triggered some memories (and an savings tip article idea!) about different ways I used to save money when I didn’t have much coming in and I wanted to save up for something special. When I was younger, it was that Commodore 64 (I thought it was so cool back then), then a car, then Christmas money, etc. While some of these may not work for you and are for smaller savings targets, they worked for me and they may inspire you to revisit an old practice or think of something new so you can pay for your next special outlay out of pocket instead of busting out the credit card if you didn’t budget for it.
Tips on Saving Money in a Painless Fashion
1. The Checkbook Whole Dollar Method – I actually still use this one today. I always like to have a buffer in my checkbook for a few reasons. First, it’s not difficult to make a mistake and a bounced check is extremely embarrassing. Next, I like to leave most of my money in a higher yielding savings account since checking accounts are notorious for low/no interest rates, so I keep the balance reasonably low in the checking account. Finally, my wife tends to call me at work and say, “Hi, I’m writing a check for such and such, is that OK?” and without any notice and the hassle of moving money around online constantly, it’s good to have a little buffer in there.
So, what I like to do is for every payment (95% of my payments are through electronic bill pay since it’s so much more convenient), I always round up to the next dollar and balance the checkbook that way. A bill for $311.11 is recorded as $312 and so on. Assuming a median cent payment amount of .50 (some will be more, some less, but over a long period of time, .50 is accurate), and say, 20 payments per month, I’m setting aside $10/month. This is $120 per year I don’t even notice – nice fancy dinner or extra year-end payment in the kids’ 529 or whatever. So, after a year, while your checkbook may reflect a measly $25 at the end of the month, it’s comforting to know that there’s actually more like $145 in there.
This may bother you a bit if you’re a perfectionist and have to have your checkbook match your online statement to the penny when the checks clear. Me? I don’t really care. I’d rather have more in there than I need. I’ve gotten to the point where my online balance is showing as several hundred dollars more than my checkbook written balance. So, I know if something pops up and I’m going to dip below zero, I have plenty of breathing room.
2. The 5 Dollar Bill Stash – People that pay for most things in cash end up with lots of tens, fives and singles. A method I heard about that sounds effective is some people will then never break a $5. They stash every $5 that comes back as change. It’s another mental trick, if you will (you’re not really “saving” anything, you’re just using different bills to buy things) that forces you so stash $5 at a time. It’s conceivable that if you’re using cash daily and generating say, 4 $5 bills per week, that $20/week is over $1000 per year! You may not even notice the missing fives, but you’ll sure notice the 4 figure stash at the end of the year.
3. All Spare Change Method – I used to do this as well, but now my kids derive the benefit by snagging my change each night. I never use change to buy anything. When something’s $4.09, I pay with a $5 bill. When I get home each day, I leave the change on my nightstand and eventually sweep it into a can. Eventually I make my way over to a TDBank (don’t miss a free $10 per kid with their summer reading program) with the change counter and throw the proceeds in my savings account. It’s usually well over $100 per year. Now that my kids take it, it’s going into their college account which I’d be paying for anyway, so I guess in a way, it’s a wash.
Do you have any simple and painless savings tips for something special each year?
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