What are you saving money for?
A European vacation? The kids’ college tuition? An emergency fund? Or maybe you’re dreaming of the perfect retirement.
For many of us, saving money is a difficult — or seemingly impossible — chore. But it doesn’t have to be that way.
“If you have trouble putting money aside in a savings account, maybe the solution is to stop struggling and put things on autopilot,” says Money Talks News founder Stacy Johnson.
Here are seven tips to get you going:
1. Pay yourself first
Payroll deduction is among the best fixes for struggling savers. With this approach, you have money automatically taken from your paycheck and transferred to a savings account or retirement account. Your employer may even allow you to directly deposit paychecks into multiple accounts.
Also, send any additional income from raises, bonuses, cash awards or other windfalls straight to savings. If your air conditioner breaks down or it’s time to take that cruise, you’ll have a nice sum of money waiting for you in the bank.
2. Round up your savings
Some banks, including Bank of America, have programs that automatically round up debit-card purchases, and then transfer the extra amount into your savings account.
For example, say your tall vanilla latte costs $3.50. Under this system, your bill would be rounded up to $4, with the extra 50 cents deposited into your savings account.
Just 50 cents a day would build to a painless $182.50 over the course of one year.
3. Save your change
The low-tech version of the round-up program is stashing away your spare change at the end of each day. Keep it in a jar, mug, glass or piggy bank. When the container is full, turn that change into a bank deposit. Stacy says he turbo-charges this plan by stashing singles as well as coins.
Coinstar will exchange your coins for an electronic gift card from merchants like Amazon. That won’t raise your savings account balance, but it will give you the opportunity to save your spare change for a special item.
4. Pay with cash
Using cash automatically makes you spend less compared with using plastic. An oft-quoted Dun & Bradstreet study concluded that people spend 12 to 18 percent more when using credit cards instead of cash.
Why? If you’re worried about schlepping back to the ATM to reload your wallet, you will be less tempted to spend more cash than you have on hand. Also, you’ll stick to your shopping list and resist in-store temptations to buy more items than you intended.
5. Use rewards credit cards
If you must use a credit card, use one that offers cash back or rewards. Then, you’re earning cash or equivalents without effort.
You can check out who’s got the right card for you by using Money Talks News’ credit card search tool.
6. Bank your discounts
What do you do with all the money you save buying bargains? Check your receipts. Most now conveniently tell you how much you saved on a sale item compared with its regular price, or how much you saved by redeeming coupons. Add the savings up.
Did you buy a cheaper generic and save a bundle over a name brand? Track the difference.
Make it a habit to reward yourself by placing the amount that saved from bargains into your savings account.
7. Automate your transfers
Check with your bank or credit union about how to set up automatic transfers from your checking account to your savings account. This is another way of making sure you pay yourself first. You can even set up sub-accounts and label them for special goals, such as “college fund” or “new car fund.”
Now that your savings are on automatic, relax and watch your balance grow.
Maryalene LaPonsie contributed to this report.
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